Relaxations in the online proficiency self-assessment test for Independent Directors

In a major relief to Independent Directors, MCA has amended the Companies (Appointment and Qualification of Directors) Rules, 2014 to provide various relaxation with respect to the requirement to undergoing online self-assessment proficiency test. The key changes are

1. Every individual whose name is included in the data bank can pass the online proficiency self-assessment test conducted by the Institute (IICA) within a period of two years from the date of inclusion of his name in the data bank instead of one year;
2. The passing criteria of the online proficiency self-assessment test will be 50% instead of 60%; and
3. The eligibility criteria for exemption from online proficiency self-assessment test has ben broadened. Now, an individual shall not be required to pass the online proficiency self-assessment test when he has served for a total period of not less than 3 years (previously it was 10 years) as on the date of inclusion of his name in the data bank:

A) as a director or KMP, in one or more of the following, namely:

(a) listed pubic company; or

(b) unlisted public company having a paid-up share capital of Rs. 10 crore or more; or

(c) body corporate listed on any recognized stock exchange or in a country which is a member State of the Financial Action Task Force (FATF) on Money Laundering and the regulator of the securities market in such member State is a member of the International Organization of Securities Commissions; or

(d) bodies corporate incorporated outside India having a paid-up share capital of US$ 2 million or more; or

(e) statutory corporations set up under an Act of Parliament or any State Legislature carrying on commercial activities.

B) in a pay scale of Director or above in the Ministry of Corporate Affairs or Ministry of Finance or Ministry of Commerce and Industry or the Ministry of Heavy Industries and Public Enterprises and having experience in handling the matters relating to corporate laws or securities laws or economic laws; or

C) in the pay scale of Chief General Manager or above in SEBI or RBI or IRDAI or PFRDA and having experience in handling the matters relating to corporate laws or securities laws or economic laws.

Previously, it covered only directorship or KMP in a listed public company, unlisted public company having a paid-up share capital of Rs. 10 crore or more and body corporate listed on any recognized stock exchange.

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MCA notified the Rule for purchase of minority shareholding in demat form

MCA has amended the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 to insert the Rule 26A pertaining to ‘purchase of minority shareholding held in demat form’. The key highlights of the Rule are as follows:

1. The company shall within 2 weeks from the date of receipt of the amount equal to the price of shares to be acquired by the acquirer, under section 236, verify the details of the minority shareholders holding shares in dematerialised form.
2. After verification, the company shall send notice to such minority shareholders by registered post or by speed post or by courier or by email about a cut-off date, which shall not be earlier than one month after the date of sending of the notice, on which the shares of minority shareholders shall be debited from their account and credited to the designated DEMAT account of the company, unless the shares are credited in the account of the acquirer, as specified in such notice, before the cut-off date.
3. A copy of the notice served to the minority shareholders, shall also be published simultaneously in two widely circulated newspapers (one in English and one in vernacular language) in the district in which the registered office of the company is situated and also be uploaded on the website of the company, if any.
4. The company shall inform the depository immediately after publication of the notice regarding the cut-off date;
5. Upon receipt of information, the depository shall make the transfer of shares of the minority shareholders, who have not, on their own, transferred their shares in favour of the acquirer, into the designated DEMAT account of the company on the cut-off date and intimate the company.
6. After receiving the intimation of successful transfer of shares from the depository, the company shall immediately disburse the price of the shares so transferred, to each of the minority shareholders after deducting the applicable stamp duty, which shall be paid by the company, on behalf of the minority shareholders.
7. Upon successful payment to the minority shareholders, the company shall inform the depository to transfer the shares of such shareholders, kept in the designated DEMAT account of the company, to the DEMAT account of the acquirer.
8. In case, where there is a specific order of Court or Tribunal, or statutory authority restraining any transfer of such shares and payment of dividend, or where such shares are pledged or hypothecated under the provisions of the Depositories Act, 1996, the depository shall not transfer the shares of the minority shareholders to the designated DEMAT account of the company.

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