The government plans to have examinations for individuals who want to become independent directors as part of bolstering the corporate governance framework, said Union Minister of State for Corporate Affairs PP Chaudhary.
While there are stringent provisions under the Companies Act, 2013, to ensure good governance standards, the roles of independent directors has come under the scanner in certain instances of corporate misdeeds.
Also, the role of independent directors is more vital at a time when the government is making efforts to make its role minimal in the affairs of corporates.
Asserting that the government is committed to improve the fabric of corporate governance in the country, Chaudhary said strengthening the role of independent directors in the affairs of companies is a step in that direction.
The minister said that a person should have certain qualifications to become an independent director on the boards of companies.
The requirement with respect to independent directors to have minimum reasonable qualifications and a certification course/exam are also being considered.PP Chaudhary, Union Minister of State for Corporate Affairs
He said the ministry is “very seriously” considering the proposal and stakeholders would be consulted before a final decision is taken.
The minister made it clear the proposal is to have examination for individuals who want to become independent directors and not for existing people who already have independent directorship. "There could be orientation programmes for existing independent directors.”
Independent directors have both advisory and monitoring role in the context of governance practices at the companies. The ministry is also planning to allow the Indian Institute of Corporate Affairs to create and maintain a data bank of independent directors.
Under Section 150 of the Companies Act, 2013, the ministry can notify an institution or an agency to maintain an independent directors' data bank.
“The government proposes to amend the Companies (Appointment and Qualification of Directors) Rules, 2014 to allow the IICA as an agency to create and maintain a data bank of independent directors,” Chaudhary said.
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