Appointment of Independent Directors & the recent amendment

As per the Companies, Act, 2013, an Independent Director is defined as “a Director other than a Managing Director or a Whole Time Director or a nominee Director who fulfils all criteria laid down in Section 149(6) of the Companies Act, 2013”. Such qualifications inter alia include possessing relevant expertise and experience. More particularly, Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, provide the compliances required by a person interested in being appointed as an independent director. Consequently, such a person, as per this sub-rule would be required to include his name to a data-bank and shall file an application accordingly and would be required to pass a self-assessment test failing which such name shall be removed from the data bank.

It is interesting to note that the Ministry of Corporate Affairs, Government of India, issued a notification dated June 10, 2022, and introduced sub-rule 5. This new sub-rule provides that any person whose name is removed from the data bank may apply for restoration of his name on payment of fees of Rs. 1000/- and subject to other conditions mentioned therein including passing the online proficiency self-assessment test.

Prior to this amendment, an individual whose name was removed from the databank under sub-rule 6(4) would have to file a fresh application under sub-rule 6(1). Now, the amendment allows these individuals to restore their names in the databank. This amendment provides some leeway to individuals whose names have been removed from the databank. It provides relatively easy restoration of the individual’s name in the databank, without having to go through the rigors of filing a fresh application under sub-rule 6(1) another time and payment of the applicable fees.

By Siddharth. V. V

The author is a student of Government Law College, Mumbai, and an intern with HS Law & Associates. Any views are his own.