The Ministry of Corporate Affairs vide notification dated 18 December, 2020 has passed the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2020. 

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Summary of Companies (Appointment and Qualification of Directors) fifth Amendment Rules, 2020

  • MCA has given relief in the time period to pass the online proficiency exam. Now, an individual shall pass the online proficiency exam within a period of two years from the date of inclusion of his/ her name in the database.
  • MCA has given relief to Foreign Directors who are also now eligible for exemption for writing the test. This will enable Indian Companies to retain and attract high calibre professionals as Directors.
  • MCA has given relief to Bureaucrat/ Public officials who are also now eligible for exemption for writing the test. This will enable Indian Companies to retain and attract high calibre public officials as Directors.
  • Exemption from passing the online proficiency test is given to an individual who has served for a total period of not less than 3 years in any of the designations and organizations specified by the Central Government as against the earlier specified period of 10 years.
  • As per the amendment, only 50% mark is sufficient to pass the online proficiency test.

Important Points of Companies (Appointment and Qualification of Directors) fifth Amendment Rules, 2020

  • An Independent Director has to mandatorily get himself registered in the database on or before 31st December 2020
  • Online proficiency test needs to be completed within 2 years from the date of inclusion of his name in the database.
  • An individual who obtain a score of 50 or more shall be deemed to have passed such test.
  • Exemption from passing the online proficiency test is given to an individual who has served for a total period of not less than 3 years as KMP in public Companies/Body corporates or holding a Designation in organizations specified by the Central Government.

Disclaimer: This note has been prepared for general guidance on matters of interest only and does not constitute a professional advice. In no Event the author/Firm shall be liable for any direct, indirect, special or Incidental damage resulting from or arising out of or in connection with the use of this information.

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