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Independent Directors Databank
What to study?
For Prelims: About the Databank and who is an independent director?
For Mains: Need for and significance of the databank.
Context: Ministry of Corporate Affairs has launched the Independent Directors Databank in accordance with the provisions of the Companies Act, 2013 and the rules made thereunder.
What is Independent directors databank?
Developed and maintained by the Indian Institute for Corporate Affairs (IICA) under Ministry of Corporate Affairs.
- Provides for a wide array of e-learning courses on various topics including the Companies Act, Securities laws, basic accountancy, board practices, board ethics and board effectiveness.
- Provides an easy to access navigation platform for the registration of existing Independent Directors as well as individuals aspiring to become independent directors.
- Companies can register themselves with the databank to search, select and connect with individuals aspiring to be Independent Directors.
Who is an independent director?
An Independent Director is a director on a board of directors representing minority shareholders and who does not have a pecuniary relationship with the company or related persons, except for sitting fees.
Their role is to take a stand unambiguously and independently to have a check and balance on the exuberance of majority shareholders that may expose the company to unwarranted risks.
The Companies Act, 2013 has mandated all listed public companies to have at least one-third of the total Directors to be independent.
Need for strengthening their role:
They must not assume a passive role. Their Strict accountability and eligibility will curb promoters placing their own ineligible candidates and family members on the listed company boards.
Sources: the Hindu.