Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2020

MCA recently has issued Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2020.

Date of Enforcement of Rules: The Rules came into force on the date of their publication in the Official Gazette i.e. 29^th April, 2020.

Revised Rule

Now registration of details of Independent Directors in Independent Directors Data Bank who were director on 1st December 2019 is been allowed till 30th June 2020.

Revised rules now provide that Every individual 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 seven months from such commencement 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:

Extract of Rule 6

Rule 6: 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 seven 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 an individual shall not be required to pass the online proficiency self-assessment test, when he has served as a director or key managerial personnel, for a total period of not less than ten years, as on the date of inclusion of his name in the databank, in one or more of the following, namely: –

(a) listed public company; or

(b) unlisted public company having a paid-up share capital of rupees ten crore or more; or

(c) body corporate listed on a recognized stock exchange:]

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 or bodies corporate at the same time shall be counted only once.

Read the full text of Notification

Government of India

Ministry of Corporate Affairs

Notification

New Delhi, the 29 April, 2020

G.S.R. . . . (E). – In exercise of the powers conferred by section 149 read with section 459 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the companies (Appointment and Qualification of Directors) Rules,2014, namely: –

1. (1) These rules may be called the Companies (Appointment and Qualification of Directors) Second Amendment Rules,2020.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Companies (Appointment and Qualification of Directors) Rules, 2014, in rule 6, in sub-rule (1), in clause (a), for the words “five months” the words “seven months” shall be substituted.

[F. No. 8/4/2018-CL-I- Part 1]

K.V.R. MURTY

Joint Secretary to the Government of India

Note: – The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide notification number G.S.R. 259(E), dated the 31^st March, 2014 and were last amendment vide notification number G.S.R. 145 (E), dated the 28th February, 2020.