Independent directors face mandatory e-registration
All independent directors may have to register as part of a new initiative by the ministry of corporate affairs (MCA), which also plans to introduce online training modules on various issues that these board members deal with. While registration is proposed to be made mandatory through an online facility, the training through electronic modules, that are being prepared by Indian Institute of Corporate Affairs, will be purely voluntary.
The registration process will be in addition to the Directors Identification Number, where a KYC process was recently undertaken. Sources told TOI that a corporate boss or a promoter, who may be an executive director on the board, will also have to register if he or she is an independent director on the board of another company.
“This will also help create a database that can be used to get the best talent available in the industry,” said an official.
Sources said that registration is already provided for in the Companies Act.
The move follows earlier efforts by the ministry to put in place a screening mechanism for independent directors after several Indian companies led by IL&FS were hit by a series of irregularities and the role of several individual had come under the scanner. In fact, provisions related to disqualification of directors was also discussed.
MCA had proposed an overhaul of the process to appoint independent directors, with many agencies also suggesting a review mechanism, but the proposals failed to get the green light from an informal group of ministers that discussed ways to improve corporate governance in Indian companies. In 2013, the government had mandated independent directors for all companies and many believe that the rush to find members resulted in the appointment of several individuals, who were not fully conversant with accounting techniques and basic rules.