This article is written by Mr. Bhumesh Verma, Managing Partner at Corp Comm Legal

To ensure sound corporate governance, the central government had made it mandatory for professionals who were serving as independent directors on boards of Indian companies or were desirous of taking up such a position to pass an online proficiency test. The objective was to streamline functionality of independent directors’ fraternity and to enhance transparency in engagement of qualified professionals as independent directors on the board of Indian companies.

Some aspects of this test did not go well with a certain segments of professionals and companies as a result, the central government had received certain reservations against this online proficient test from professionals and companies.

In an attempt to address reservations of these professionals and companies – The Ministry of Corporate Affairs (MCA) has amended Companies (Appointment and Qualification of Directors) Rules, 2014 via notification dated December 18, 2020.

 Gist of Key modifications is as follows:

· A candidate will have a period of two years from date of inclusion of such candidate name in professional’s database to clear the online proficiency test. Prior it was one year period for candidates to clear online proficiency test.

· In a major relief certain categories of professionals are exempted from taking online proficiency test. Such professionals shall include:

· Director or key managerial personnel in a listed public company, an unlisted public company with a paid-up share capital of more than INR 10 crore; statutory corporations established by central or state government for commercial activities; foreign entities with a paid-up share capital of US$ 2 million or more; and body corporate listed on a recognized stock exchange or entity incorporated in any member state of Financial Action Task Force or International Organization of Securities Commissions.

· Director under certain ministries (Corporate Affairs; Finance; Commerce and Industry and Heavy Industries and Public Enterprises) and Chief General Manager in regulatory bodies (Securities and Exchange Board Of India; Insurance Regulatory and Development Authority of India; Reserve Bank of India and Pension Fund Regulatory and Development Authority) who have expertise in handling corporate law matters.

· All aforesaid categories of professionals will be exempted from attending online proficiency test provided they have served as more than three years as independent professional as on the date of inclusion of such professionals name in database.

·  Candidates shall need to get more than 50% marks in online proficiency test to be considered as eligible candidate. Prior benchmark for passing the test is more than 60%.

These modifications seek to:

a)  ease the pressure to pass online proficiency test on prospective candidates;

b) provide ample time and opportunity for right candidates to clear online proficiency test without any hassle; and

c) Exempt qualified and experience candidates from appearing the online proficiency test.

Picture Credit: “Speaker John Boehner meets with members of the Board of Directors of the Cincinnati Parks in his office at the U.S. Capitol.” by SpeakerBoehner is licensed with CC BY-NC 2.0. To view a copy of this license, visit