Company directors may have to start clearing exams on laws

Last Updated at: March 14, 2020
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company directors
Company directors may have to start clearing exams on laws

According to a report on Bloomberg, all persons looking to join a company’s Board of Directors have to clear an online exam on company laws, ethics and capital market. While there would be no limitation for the number of attempts, there will be a fixed time frame for the aspirants to clear the director exam.

The report stated that the government has taken the step in an attempt to curb the fraudulence in the national corporate governance system, after witnessing a string of frauds. The government is set to impose a five-year ban on Deloitte Haskins & Sells for failure to flag the potential risks from the activities carried out by NBFC IL&FS.

The agency spoke to industry observers, who stated that the authorities should have been warned of the risks earlier. Injeti Srinivas, a top bureaucrat in charge of corporate affairs said, “We want to demolish the myth that independent directors don’t have any fiduciary duty. We want to propagate corporate literacy to make them aware of their duties, roles and responsibilities.”

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Experienced company directors who are already serving the board would be exempted. They will have to get themselves registered on the government database, that is being prepared. According to the existing laws, companies listed in India has to have independent directors accounting for at least a third of its board strength.

 

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Company directors may have to start clearing exams on laws

1112

According to a report on Bloomberg, all persons looking to join a company’s Board of Directors have to clear an online exam on company laws, ethics and capital market. While there would be no limitation for the number of attempts, there will be a fixed time frame for the aspirants to clear the director exam.

The report stated that the government has taken the step in an attempt to curb the fraudulence in the national corporate governance system, after witnessing a string of frauds. The government is set to impose a five-year ban on Deloitte Haskins & Sells for failure to flag the potential risks from the activities carried out by NBFC IL&FS.

The agency spoke to industry observers, who stated that the authorities should have been warned of the risks earlier. Injeti Srinivas, a top bureaucrat in charge of corporate affairs said, “We want to demolish the myth that independent directors don’t have any fiduciary duty. We want to propagate corporate literacy to make them aware of their duties, roles and responsibilities.”

Start Your Own Business

Experienced company directors who are already serving the board would be exempted. They will have to get themselves registered on the government database, that is being prepared. According to the existing laws, companies listed in India has to have independent directors accounting for at least a third of its board strength.

 

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A lawyer with 14 years' experience, Vikram has worked with several well-known corporate law firms before joining Vakilsearch.