Asserting that steps have been initiated to develop a strong cadre of independent directors, Corporate Affairs Secretary Injeti Srinivas has said such people should not be part of a "cosy club" as they are key to corporate governance.
The corporate affairs ministry, which is implementing the companies law, has taken various measures, including having a separate registry for independent directors in order to have high-quality people in that position.
In reces, there have been instances of independent directors coming under the scanner in connection with various corporate misdoings.
According to Srinivas, an independent director is the kingpin of the wheel of corporate governance and have a lot of responsibilities, which the person needs to discharge.
"We need to develop a strong cadre of independent directors. It should not remain a cosy club. All the recent initiatives taken for having a separate registry for independent directors, mandatory test, continuous learning... are aimed at developing high quality independent directors," he told PTI.
The ministry introduced an online proficiency self-assessment test for independent directors from December 1, 2019. The Indian Institute of Corporate Affairs (IICA) is maintaining a data bank of independent directors as well as conducting the proficiency test.
Certain categories of individuals, including those who have served for at least ten years as director or key managerial personnel in a company, are not required to take the test.
The data bank has an individual's Director Identification Number (DIN), Permanent Account Number (PAN), list of companies in which he or she is or was a director and nature of directorship, among other details.
The secretary noted that close to 20,000 registrations have taken place under the new framework. Around 14,000 people have paid the fees and have become members.
"Others are in the process. I expect that the figure will gradually rise," he added.
Applications can be made for inclusion in the data bank for one year, five years or life time.
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