RegulationIndia

India is the only major market where independent-director eligibility is a registry entry and a test

Rule 6 of the Companies (Appointment and Qualification of Directors) Rules requires registration in the IICA independent-director databank and, unless exempt, a pass in the online proficiency self-assessment test.

1 December 2020

No other market on this exchange operates a statutory databank of independent directors or a proficiency examination. India does both: an individual must be registered in the databank maintained by the Indian Institute of Corporate Affairs and, unless they qualify for an exemption based on prescribed experience, must pass the online proficiency self-assessment test.

It sits alongside the most prescriptive tenure regime anywhere: a term of up to five consecutive years under Companies Act s.149(10), with no more than two consecutive terms under s.149(11), followed by a three-year cooling-off period.

SEBI's LODR Regulations require at least six directors, at least half independent where the chairperson is executive or a promoter, and at least one woman independent director for the top 1,000 listed entities.

What it means for a cross-border candidate

For a cross-border candidate this prescriptiveness is an advantage, not an obstacle. Eligibility in India is a checklist you can complete in advance — DIN, databank, test — rather than a judgement someone forms about you. The slow step is the apostille chain for a foreign national's DIN documents, so begin it before you have a specific board in view.

This paragraph is the Global ID Exchange’s own reading, not a statement by any authority named above. Everything in the body of this item is a matter of record; this is judgement.

Sources

  • Companies Act 2013, ss.149(4), 149(10)–(11)
  • Companies (Appointment and Qualification of Directors) Rules 2014, Rule 6
  • SEBI (LODR) Regulations 2015, Reg. 17(1)

Rules change and transitional provisions frequently apply. Verify against the primary instrument before you rely on any provision described here.

Read next: the Indian regime in full and India ID Exchange, our dedicated Indian platform.

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