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Name of Independent Director in Data Bank can be Included in next 3 Months: MCA

calendar15 Oct, 2020
timeReading Time: 2 Minutes
Name of independent directors in Data bank

MCA has stretch out the timeline for the inclusion of Name of Independent director in Data bank. The Ministry of Corporate Affairs (also known as MCA) decided to offer a 3-month time extension to the independent director to include their name in Data Bank. The Ministry of Corporate Affairs has notified the Companies Fourth Amendment Rules, 2020, where Rule 6 has been altered and renders additional three months to the independent director for completing the online exam. 

The Notification shared by the Ministry of Corporate Affairs states that “In the Companies Rules, 2014 (Rule 6 and sub-rule (1), clause (a)), for the words 10 months the words 13 months shall be replaced”. 

Read our article:Independent Director: Appointment Criteria, Process, Roles & Duties

Extension given by Government through the Notification

Earlier this year, the Central government through the notification stated that the rule would be applied from 23/06/2020, and by this registration of details of independent directors in data banks who started their term on 1/12/2019 is been permitted till 30/9/2020. 

The revised rules say that every person appointed as an independent director in a company, on the date of commencement of the company fifth amendment rules, 2019, shall within a timeline of 13 months from such commencement apply to the institute to add his name in the Data bank for a period as specified in sub-rule (2), till he continues to serve the tenure as an independent director in any company

Who is an Independent Director? 

As per Companies Act 2013[1], an independent director (aka non-executive director) is an individual who doesn’t have any connection with the organization that may affect the independence of his decisions. In order to be an independent director of a registered organization, an individual must have sufficed past experience in the company other than auditors/lawyers/consultants based firm. In addition to this basic requirement, the individual must not hold two percent or more of the shares of the organization.

Independent Director

Tasks Performed by the Independent Director

  • Taking part in all meetings of BODs.
  • Looking into matters (internal or external) that affects the company in one way or another. 
  • Making sure that adequate deliberation takes place before approving any transaction and assures that the same is free from any conflict of interest. 
  • Keeping eye on the unethical behavior or violation of the company’s code of conduct and report the same to the concerned person, if necessary. 
  • Keeping the integrity of confidential information including advertising, commercial secrets, sale promotion, and technologies. Disclosure of such information cannot be done without the board’s approval. 
  • Seek appropriate clarification on any matters related to the company. Hire professionals from outside to avail expertise on a certain matter of the company. 
  • Ensure good governance within the organization. 
  • Ascertaining about the company’s resources and ensures its smooth functioning, regardless of the constraints. 


MCA’s decision to extend the timeline for the inclusion of name of independent directors in Data bank is a big relief from the compliance viewpoint. The said amendment will help these individual to work with more authenticity. If you need any sort of assistance regarding the same, head over to CorpBiz’s professional and let them help you out.

Read our article:What’s new in Indian Institutes of Information Technology Laws (Amendment) Bill, 2020


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