Empanelment Process and Exemptions for Independent Directors on the Databank

 Empanelment Process and Exemptions for Independent Directors on the Databank

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1. Who is an Independent Director?

An independent director in relation to a company,

·         means a director other than managing director or a whole-time director or a nominee director, who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience;

·         Who is or was not a promoter of the company or its holding, subsidiary or associate company.

·         Who is not related to promoters or directors in the company, its holding, subsidiary or associate company;

- Who has or had no pecuniary relationship, other than remuneration as such director or having a transaction not exceeding ten percent. of his total income or such amount as may be prescribed, with the company, its holding, subsidiary or associate company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year;

None of whose relatives:

·         Is holding any security of or interest in the company, its holding, subsidiary or associate company during the two immediately preceding financial years or during the current financial year: Provided that the relative may hold security or interest in the company of face value not exceeding fifty lakh rupees or two percent. of the paid-up capital of the company, its holding, subsidiary or associate company or such higher sum as may be prescribed;

·         Is indebted to the company, its holding, subsidiary or associate company or their promoters, or directors, in excess of such amount as may be prescribed during the two immediately preceding financial years or during the current financial year;

·         Has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, its holding, subsidiary or associate company or their promoters, or directors of such holding company, for such amount as may be prescribed during the two immediately preceding financial years or during the current financial year; or

·         Has any other pecuniary transaction or relationship with the company, or its subsidiary, or its holding or associate company amounting to two percent. or more of its gross turnover or total income singly or in combination with the transactions referred to in sub-clause (i), (ii) or (iii);

- Who, neither himself nor any of his relatives:

·         Holds or has held the position of a key managerial personnel or is or has been an employee of the company or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed;

·         Is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of - A firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; or - Any legal or consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten percent. or more of the gross turnover of such firm;

·         Holds together with his relatives two percent. or more of the total voting power of the company; or

Is a Chief Executive or director, by whatever name called, of any nonprofit organization that receives twenty-five percent. or more of its receipts from the company, any of its promoters, directors, or its holding, subsidiary, or associate company or that holds two percent. or more of the total voting power of the company;

Who possesses such other qualifications as may be prescribed.

2. Who can apply to be empaneled with databank?

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, and is going to be appointed as an Independent Director.

·         Who intends to get appointed as an independent director in a company before such appointment.

3. About DATA BANK

The Ministry of Corporate Affairs and Indian Institute of Corporate Affairs (IICA) have introduced a comprehensive online databank for all existing and aspiring Independent Directors. This databank draws its origin from Companies (Appointment and Qualification) Rules, 2019. As per the rules, all existing Independent Directors need to empanel with this databank within 3 months of commencement of these rules. The empanelment process is quick and simple and it has been divided into three steps.

4. Process of Empanelment of Independent Directors on Databank

- Step 1: MCA Portal Registration

·         Login to MCA Portal

·         Go to “ID Databank Registration” section under “MCA Services” and click on “Individual Registration.”

·         Enter DIN/PAN/Passport details and click on “Submit.”

·         Enter email ID and mobile no. (if not pre-populated). Enter Country code and click on “Send OTP.”<br>- Enter OTP & click on “Verify OTP.”

·         Upon successful verification, click on “Proceed” button to receive credentials for Databank in email and mobile.

Step 2: Process in Databank

·         Login to Independent Director's Databank

·         Fill profile with Personal, Educational, and Experience Details and submit declaration.

·         After submitting details, pay the subscription fee.

5. Exemption from passing the online proficiency self-assessment test

1. Individuals who are or have been, for at least ten years:

(A) an advocate of a court

(B) in practice as a chartered accountant

(C) in practice as a cost accountant

(D) in practice as a company secretary

shall not be required to pass the online proficiency self-assessment test.

2. Individuals who have served for a period of not less than 10 years as a Director or Key Managerial Personnel (KMP) in a listed public company or in an unlisted public company having a paid-up share capital of rupees 10 crores or more.

However, registration with the online databank will remain compulsory for exempted individuals.

6. Fee Structure for individual empanelment

·         Rs. 5,000 + 18% GST for 1 Year subscription

·         Rs. 15,000 + 18% GST for 5 Years subscription

·         Rs. 25,000 + 18% GST for Lifetime subscription

Note: Information presented for Independent Directors' empanelment is for reference only. For official details, visit https://www.independentdirectorsdatabank.in/empanel.

 

FCS Manjeet S Dhillon

Manjeet S Dhillon & Associates

(Company Secretaries)

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