The Independent Directors Databank is an initiative of the Ministry of Corporate Affairs for the capacity building of the existing Independent Directors, in order to inculcate the high standards of corporate governance in India. The Databank is a key instrument to enable Independent Directors to become “Agents of Change” on the corporate boards. The databank has been developed in accordance with the provisions of the Companies Act 2013 as mentioned below:

Section 150 of the Companies Act, 2013 provides that “an independent director can be selected from a data bank maintained by any-body, institute or association, as may be notified by the Central Government. The data bank would contain names, addresses and qualifications of persons who are eligible and willing to act as independent directors. The company needs to ensure exercise of due diligence before selecting an independent director from the data bank”.

On 22nd October 2019, the Ministry of Corporate Affairs (MCA) notified the Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 and amended the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019.

The Companies (Creation and Maintenance of Databank of Independent Directors) Rules, 2019 effective from 1st December, 2019 authorised Indian Institute of Corporate Affairs (IICA) to act as the institute or association, responsible for the creation and maintenance of the online databank containing names, addresses and qualifications of existing Independent Directors and persons who are eligible and willing to act as Independent Directors. In furtherance, IICA was also entrusted with the duty to conduct an online proficiency self-assessment test of the Independent Directors, which would be available from 01st March 2020.

The Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 effective from 1st December, 2019 require the existing Independent Directors as well as the professionals aspiring to become independent directors, to apply online to IICA for inclusion of their name with the Independent Directors Databank. Upon registration the individuals are required to pass a online proficiency self-assessment test within a period of 1 year from the date of inclusion of his name in the data bank, failing which, his name shall stand removed from the databank of the institute. Exemption from passing online proficiency self-assessment test has been granted to individuals who has 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.

The databank focuses on the following key objectives:

  Empanelment of existing Independent Directors as well as the professionals aspiring to become independent directors.

  Build capacities of Individuals by delivering eLearning courses on topics related to corporate governance, regulatory framework, financial prudence, and other important aspects

  Provide a platform to individuals to help them acquire knowledge, develop new skills, assess their understanding, and apply best practices.

  Create an eco-system of individuals looking for opportunities and corporate requiring to appoint independent directors.

The Databank is a comprehensive repository of both existing independent directors as well as individuals eligible and willing to be appointed as Independent Directors. All Independent directors are required to register themselves with the Databank within a period of 7 months effective from 1st December, 2019. Now the last date of registration for Independent Directors has been extended upto 30th June, 2020.

The Databank also provides for the provision of registration of the Companies enabling them to search, select and connect with individuals who possess the right skills and attitude for being considered for appointment as Independent Directors.

The Databank, can be accessed at www.mca.gov.in or www.independentdirectorsdatabank.in, to provide an easy access & navigation platform for the registration. The Databank overview video is given as under:

https://www.independentdirectorsdatabank.in/databank_video

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IICA along with the databank has also released a Handbook for the easy understanding of the ID and corporate empanelment process, learning management system, key objectives of the databank, etc. To go through the Handbook please click here:

https://www.independentdirectorsdatabank.in/pdf/handbook/Handbook-v15.pdf