Persistence Paid Off
I am glad to inform that I am an Associate Company Secretary w.e.f. November 15, 2019 and Zappy has been nominated for India 500 Startups Award, 2019 by India 5000 Awards.
In this edition we will be seeing about Nidhi Rules and Amendments thereof. Our usual Legal terms and News Bites related to notifications by MCA, SEBI, RBI, IT and GST will follow the article.
CS Saranya Deivasigamani,
CEO
Independent Directors
Independent director is someone who do not have any material or pecuniary relationship with the Board of Directors of a Company. According to Section 149 (4) of the Companies Act, 2013, Every listed public company shall have at least one-third of the total number of directors as independent directors and the Central Government may prescribe the minimum number of independent directors in case of any class or classes of public companies.
The Act also prescribes that an independent director may be selected from a data bank containing names, addresses and qualifications of persons who are eligible and willing to act as independent directors, maintained by any body, institute or association, as may by notified by the Central Government, having expertise in creation and maintenance of such data bank and put on their website for the use by the company making the appointment of such directors. To facilitate the data bank, the Central Government has authorised Indian Institute of Corporate Affairs to maintain the data bank and conduct eligibility test to the independent directors.
On October 22, 2019, the Central Government further amended the Companies (Appointment and Qualification of Directors) Rules, 2014, namely that details the procedures and qualification required for appointment of Independent Directors. These rules will be effective from 1st day of December, 2019.
In the Companies (Appointment and Qualification of Directors) Rules, 2014 (hereinafter referred to as the principal rules), for rule 6 that described about the creation and maintenance of databank of independent directors has been replaced with more specific rules, namely: –
- Compliances required by a person eligible and willing to be appointed as an independent director.─
(1) Every individual –
(a) who has been appointed as an independent director in a company, on the date of commencement of the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, shall within a period of three months from such commencement; or
(b) who intends to get appointed as an independent director in a company after such commencement, shall before such appointment,
apply online to the institute for inclusion of his name in the data bank for a period of one year or five years or for his life-time, and from time to time take steps as specified in sub-rule (2), till he continues to hold the office of an independent director in any company:
Provided that any individual, including an individual not having DIN, may voluntarily apply to the institute for inclusion of his name in the data bank.
(2) Every individual whose name has been so included in the data bank shall file an application for renewal for a further period of one year or five years or for his life-time, within a period of thirty days from the date of expiry of the period upto which the name of the individual was applied for inclusion in the data bank, failing which, the name of such individual shall stand removed from the data bank of the institute:
Provided that no application for renewal shall be filed by an individual who has paid life-time fees for inclusion of his name in the data bank.
(3) Every independent director shall submit a declaration of compliance of sub-rule (1) and sub-rule (2) to the Board, each time he submits the declaration required under sub-section (7) of section 149 of the Act.
(4) Every individual whose name is so included in the data bank under sub-rule (1) shall pass an online proficiency self-assessment test conducted by the institute within a period of one year from the date of inclusion of his name in the data bank, failing which, his name shall stand removed from the databank of the institute:
Provided that the individual who has served for a period of not less than ten years as on the date of inclusion of his name in the databank as director or key managerial personnel in a listed public company or in an unlisted public company having a paid-up share capital of rupees ten crore or more shall not be required to pass the online proficiency self-assessment test:
Provided further that for the purpose of calculation of the period of ten years referred to in the first proviso, any period during which an individual was acting as a director or as a key managerial personnel in two or more companies at the same time shall be counted only once.
Explanation: For the purposes of this rule,-
(a) the expression “institute” means the ‘Indian Institute of Corporate Affairs at Manesar’ notified under sub-section (1) of section 150 of the Companies Act, 2013 as the institute for the creation and maintenance of data bank of Independent Directors;
(b) an individual who has obtained a score of not less than sixty percent. in aggregate in the online proficiency self-assessment test shall be deemed to have passed such test;
(c) there shall be no limit on the number of attempts an individual may take for passing the online proficiency self-assessment test.”
It is no more easy to become an Independent Director of a Public Company. The existing Independent Directors or the new aspirants have to be aware of not only their responsibilities but also have a little internet proficiency to complete the online examination.
Legal Term
Canonical
adv. Authoritative or standard; conforming to an accepted rule or procedure.
MCA Updates
- Notification – Section 396 dt 30.10.2019 for ROC Jammu -Jurisdiction of UT of JK and UT of Ladakh
- Notification dt 30.10.2019-ROC Jammu-Jurisdiction of Adjudication of Penalties-UT of JK and UT
- Notification dt 30.10.2019-Jurisidiction of RD, New Delhi -UT of JK and UT of Ladakh.
SEBI Updates
- Cyber Security & Cyber Resilence
- Guidelines on AML Standards, CFT / Obligation of Intermediaries.
- Framework for issue of Depository Receipts
- SEBI (Issue and Listing of Debt Securities by Municipalities) (Amendment) Regulations, 2019
- Corrigendum to Securities and Exchange Board of India (Buy-Back of Securities) (Second Amendment) Regulations, 2019.
RBI Updates
IT Updates
- No Major Updates.
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