Don’t miss the latest developments in business and finance.

Letter to BS: Govt needs effective ways to assess independent directors

As independent directors are appointed for their skills and expertise they bring to the table, an online test is an irrelevant exercise to determine their proficiency.

Independent Directors
Representative Image
Business Standard
2 min read Last Updated : Mar 10 2020 | 9:09 PM IST
The recent decision by the Ministry of Corporate Affairs to bring in certain exemptions for an online proficiency test held for independent directors is a welcome move. The mandate describes that any independent director with over 10 years of experience or a company having a paid-up capital of Rs 10 crore is exempted from taking the test. The ministry should also exempt proficiency tests for key managerial persons, including CS and CAs, who hold relevant skills and expertise in corporate and security laws. As most of the listed companies mandate a professional to undertake corporate secretarial matters, the exemption of such skilled professionals will ensure fair play and distinguish them from others. As independent directors are appointed for their skills and expertise they bring to the table, an online test is an irrelevant exercise to determine their proficiency.
 
The ministry should otherwise adopt innovative ways to test the proficiency of an individual through board familiarisation programmes, seminars, conferences, industry-oriented programmes and workshops and thus align the independent director appraisal process as per the current trends in the market.
 
Varun Dambal, Bangalore Letters can be mailed, faxed or e-mailed to: 
The Editor, Business Standard 
Nehru House, 4 Bahadur Shah Zafar Marg 
New Delhi 110 002 
Fax: (011) 23720201  ·  E-mail: letters@bsmail.in
All letters must have a postal address and telephone number

Topics :Letter to BScorporate governanceIndependent directors

Next Story