To stop corporate frauds, Injeti Srinivas, the Corporate Affairs Secretary has announced that independent directors on company boards will soon have to clear an exam before they can be appointed.
According to the report, the exam will be an online assessment covering the basics of Indian company law, ethics, and capital market norms among other areas. While aspiring directors will have a fixed time frame within which they have to clear the exam, and will be allowed an unlimited number of attempts.
Experienced directors who have already been on boards for several years will be exempt from the test but will have to register themselves on a database the government is preparing. This compilation will be a one-stop platform where companies looking for independent directors can meet those willing to serve.
According to the existing law, every company listed in India has to have independent directors accounting for at least a third of its board strength. Their main duty is to act as overseers outside the influence of the firm, safeguarding the interests of minority shareholders.
