The courses for Independent Director are all over social media. I noticed this course in June 2023, last year, and it caught my eye and secured a place on my vision board. Something I felt I should do ASAP!
Why did it suddenly crop up? The question is a very genuine one. The courses being advertised are not cheap.
Well, the answer is that The Ministry of Corporate Affairs has recognized the significance of bolstering the role of Independent Directors and improving their effectiveness. MCA intends to achieve this by establishing a pool of skilled professionals (Independent Directors) who can serve as catalysts for change.
The Ministry of Corporate Affairs (MCA), in collaboration with the Indian Institute of Corporate Affairs (IICA), has established a databank of Independent Directors in compliance with Section 150 of the Companies Act, 2013.
Additionally, serving as a facilitator and educator, the Ministry has implemented a capacity-building initiative for Independent Directors. This includes an integrated Learning Management System (LMS) designed to offer a dynamic and interactive library of eLearning courses.
Independent Directors play a crucial role in corporate governance, making substantial contributions to boardrooms with their diverse skill sets and impartial judgment on critical matters. They are tasked with upholding good governance by effectively fulfilling their responsibilities of monitoring and advising. Their actions should prioritize the company's best interests and those of all stakeholders.
Process for empanelment of Independent Directors
You can start the empanelment process by first signing up with the MCA site. Upon signing up, you will receive two login credentials, one for the V3 services and one for the V2 services. For registration with the Independent Directors Databank, please use your V2 login credentials.
There might be some delay in receiving the V2 login credentials. Please wait for the email before reaching out to the support desk. One you have the mail as shown in the image given below you can change the password as directed in the mail.
Now you can login to the IICA website with the same credential. Complete the profile and pay the fee as per your choice. Fee Structure for individual empanelment is as given below-
- 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
Once the fee is paid 49 online modules will be open for you to study & attempt self test at the end of the module. The final test is summarization of all the 49 modules.
Online Proficiency Self Assessment Test
According to the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules 2019, both current Independent Directors (IDs) and professionals aspiring to become IDs must apply online to the IICA for registration in the databank.
Once registered, all IDs must successfully complete the online proficiency self-assessment test administered by IICA within two years of their inclusion in the databank.
Failure to pass the test within the specified timeframe will lead to the removal of the individual’s name from the databank. Re-registration will then be required, subject to a fee. However, re-registered individuals must still pass the test successfully.
Individual Exempted
Some individuals are exempt from this test, and a detailed list can be found on the Independent Directors Databank website. These exemptions are applicable to individuals who, at the time of registration, have served as:
A court advocate for a minimum of 10 years;
Practicing chartered accountants;
Practicing cost accountants; or
Practicing company secretaries.
However, all other professionals are still required to take the test.
Overview of the self-assessment test
The main subjects covered include Companies Law, Securities Law, Basic Accountancy, and Corporate Governance.
Marking Scheme:
Total marks: 100
Total number of multiple-choice questions (MCQs): 50
Total test duration: 75 minutes
Marks allocated per question: 2
Average time per question: 1.5 minutes
Question breakdown
Board Essentials: direct questions
Board Practice: scenario-based questions
To pass, an individual must achieve a minimum aggregate score of 60 percent. There is no limit to the number of attempts allowed to pass the self-assessment test.
Requirements for clearing the test
The examination isn't excessively difficult, particularly for experienced professionals. It's crucial to review the syllabus and grasp key responsibilities of Independent Directors (IDs), such as seeking clarification, actively engaging in board committees, and ensuring ethical conduct.
Many professionals probably have prior experience in these domains, which can be harnessed to successfully navigate the test with focused preparation.
Becoming an Independent Director not only brings prestige but also financial benefits and a well-balanced work-life equilibrium, enabling individuals to effectively utilize their diverse experiences.
Conclusion
The process of registering in the Independent Directors Databank and taking the online self-assessment test is an essential step towards enhancing corporate governance and individual professional development. The initiative by the Ministry of Corporate Affairs, in collaboration with the Indian Institute of Corporate Affairs, underscores the recognition of the pivotal role Independent Directors play in fostering effective governance within organizations.
By following the empanelment process outlined, individuals can gain access to a wealth of resources and online modules aimed at bolstering their understanding of corporate governance principles. The proficiency self-assessment test serves as a benchmark to ensure that Independent Directors possess the necessary knowledge and skills to fulfill their responsibilities effectively.
While the process may seem daunting, particularly for those new to the role, diligent preparation and a focus on key areas such as Companies Law, Securities Law, Basic Accountancy, and Corporate Governance can significantly enhance the likelihood of success.
Furthermore, exemptions are available for certain professionals with relevant experience, although all individuals are encouraged to undertake the test to demonstrate their commitment to professional development.
Ultimately, becoming an Independent Director not only brings prestige but also financial benefits and the opportunity to contribute meaningfully to the governance framework of organizations. By embracing this journey, individuals can unlock new opportunities for growth and make a lasting impact in the corporate landscape.
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