In this article Compliances For Appointment Of Independent Directors has been explained in details.
Rule 6 of The Companies (Qualifications & Appointment of Independent Directors) Rules, 2014
(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 [Amendment rule commenced from 1st December 2019], shall within a period of five months from such commencement;
(b) who intends to get appointment of independent directors 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.
(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 up-to 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 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: –
- listed public company; or
- unlisted public company having a paid-up share capital of rupees ten crore or more; or
- 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 4[companies or bodies corporate] at the same time shall be counted only once.
Process in MCA Portal
Fee for Emplacement Subscription
- Rs. 5,000 for 1 Year
- Rs. 15,000 for 5 Years
- Rs. 25,000 for Lifetime
No. Of Independent Directors- Section 149(4) and Rule 4 of The Companies (Appointment and Qualifications of Directors) Rules, 2014
Rule 4 of The Companies (Appointment and Qualifications of Directors) Rules, 2014
(1) The following class or classes of companies shall have at least two directors as independent directors –
(i) The Public Companies having paid up share capital of ten crore rupees or more; or
(ii) The Public Companies having turnover of one hundred crore rupees or more; or
(iii)The Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding fifty crore rupees:
Provided that in case a company covered under this rule is required to appoint a higher number of independent directors due to composition of its audit committee, such higher number of independent directors shall be applicable to it:
Section 177 of Companies Act, 2013 Audit Committee
- The Board of Directors of every listed public company and such other class or classes of companies, as may be prescribed, shall constitute an Audit Committee.
Provided further that any intermittent vacancy of an independent director shall be filled-up by the Board at the earliest but not later than immediate next Board meeting or three months from the date of such vacancy, whichever is later:
Provided also that where a company ceases to fulfil any of three conditions laid down in sub-rule (1) for three consecutive years, it shall not be required to comply with these provisions until such time as it meets any of such conditions;
NO BAR ON PRACITISING CAs FOR APPOINTMENT OF INDEPENDENT DIRECTORS
As per Clause (11) of Part I “Professional misconduct in relation to chartered accountants in practice” of “The First Schedule” of The Chartered Accountants Act, 1949 (No. 38 of 1949), There is no bar on practicing CAs for appointment of independent directors.
- Indiataxlaws.com is an online knowledge bank for professionals like CA, CS, CMA, Advocates, MBAs, and Finance Professionals. We provide the latest updates, articles, notifications, circulars, court judgments etc. relating to taxation and corporate laws in India.
Latest Article Written
- 2022.06.30Indirect TaxAnalysis of Arrest provisions under GST & Can a CA be arrested under CGST Laws?
- 2022.03.10ArticlesGST COMPLIANCE CALENDAR FOR MARCH 2022
- 2022.03.10ArticlesSupreme court order for extension in the period of limitation (Suo-moto order by the Hon’ble Supreme court)
- 2022.03.10ArticlesGST on Cryptocurrency or Digital Assets