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Independent directors will soon have to take exams in India

Christian Fernsby ▼ | June 13, 2019
Independent directors on company boards will soon have to clear an exam before they can be appointed, said Injeti Srinivas, the top bureaucrat in charge of corporate affairs.
Independent directors
Asia   Observers say the companies’ independent overseers should have detected signs
Who will watch the watchdogs has become a burning question in India which has in the past year charged a jeweller with defrauding a state-run lender of more than $2 billion, seen defaults at non-bank financiers send its financial system to the brink of a crisis, and and watched as billionaires toppled into bankruptcy. Observers say the companies’ independent overseers should have detected signs of trouble even before they manifested.

“We want to demolish the myth that independent directors don’t have any fiduciary duty,” Srinivas said in an interview in New Delhi on June 6. “We want to propagate corporate literacy to make them aware of their duties, roles and responsibilities.”

The exam will be an online assessment covering the basics of Indian company law, ethics, and capital market norms among other areas, Srinivas said. While aspiring directors will have a fixed time frame within which they have to clear the exam, they will be allowed an unlimited number of attempts, he said.

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, Srinivas said.


 

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