{"id":720,"date":"2020-12-29T11:24:48","date_gmt":"2020-12-29T11:24:48","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=720"},"modified":"2021-03-17T12:36:02","modified_gmt":"2021-03-17T12:36:02","slug":"companies-appointment-and-qualification-of-directors-fifth-amendment-rules-2020","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/companies-appointment-and-qualification-of-directors-fifth-amendment-rules-2020\/","title":{"rendered":"Companies (Appointment &#038; Qualification of Directors) Fifth Amendment Rules 2020: A Detailed Summary"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Recently, MCA (Ministry of&nbsp;Corporate Affairs), on 18.12.2020 had issued a Notification to inform that the Companies (Appointment and Qualification of Directors) Rules 2014 have been amended to the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules 2020. <\/p>\n\n\n\n<p>Further, such rules\nhave come into force from the date of publishing in the Official Gazette, i.e.,\n18.12.2020.<\/p>\n\n\n\n<p>In this blog, we will\ndiscuss the key points of the Companies (Appointment and Qualification of Directors)\nFifth Amendment Rules 2020.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a9d6d5b098\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a9d6d5b098\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-appointment-and-qualification-of-directors-fifth-amendment-rules-2020\/#Summary_of_Companies_Appointment_and_Qualification_of_Directors_Fifth_Amendment_Rules_2020\" title=\"Summary of Companies (Appointment and Qualification of Directors) Fifth Amendment Rules 2020\">Summary of Companies (Appointment and Qualification of Directors) Fifth Amendment Rules 2020<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-appointment-and-qualification-of-directors-fifth-amendment-rules-2020\/#Mandatory_Registration\" title=\"Mandatory Registration\">Mandatory Registration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-appointment-and-qualification-of-directors-fifth-amendment-rules-2020\/#Extension_in_Time_Period_to_Pass_Online_Proficiency_Test\" title=\"Extension in Time Period to Pass Online\nProficiency Test\">Extension in Time Period to Pass Online\nProficiency Test<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-appointment-and-qualification-of-directors-fifth-amendment-rules-2020\/#Relief_to_Bureaucrats_Foreign_Director_and_Public_Officials\" title=\"Relief to Bureaucrats, Foreign\nDirector, and Public Officials\">Relief to Bureaucrats, Foreign\nDirector, and Public Officials<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-appointment-and-qualification-of-directors-fifth-amendment-rules-2020\/#Minimum_Marks_Condition\" title=\"Minimum Marks Condition\">Minimum Marks Condition<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-appointment-and-qualification-of-directors-fifth-amendment-rules-2020\/#Exemption_from_Clearing_Online_Proficiency_Test\" title=\"Exemption from Clearing Online\nProficiency Test\">Exemption from Clearing Online\nProficiency Test<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-appointment-and-qualification-of-directors-fifth-amendment-rules-2020\/#Other_Announcements\" title=\"Other Announcements\">Other Announcements<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-appointment-and-qualification-of-directors-fifth-amendment-rules-2020\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-appointment-and-qualification-of-directors-fifth-amendment-rules-2020\/#Official_Notification\" title=\"Official Notification\">Official Notification<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Summary_of_Companies_Appointment_and_Qualification_of_Directors_Fifth_Amendment_Rules_2020\"><\/span>Summary of Companies (Appointment and Qualification of Directors) Fifth Amendment Rules 2020<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The detailed summary of the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules 2020 is as follows:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" loading=\"lazy\" width=\"493\" height=\"905\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Summary-of-Companies-Appointment-and-Qualification-of-Directors-Fifth-Amendment-Rules-2020-heading.png\" alt=\"Fifth Amendment Rules 2020\" class=\"wp-image-726\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Summary-of-Companies-Appointment-and-Qualification-of-Directors-Fifth-Amendment-Rules-2020-heading.png 493w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Summary-of-Companies-Appointment-and-Qualification-of-Directors-Fifth-Amendment-Rules-2020-heading-163x300.png 163w\" sizes=\"(max-width: 493px) 100vw, 493px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Mandatory_Registration\"><\/span>Mandatory Registration<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>An Independent Director needs to\nmandatorily get himself\/ herself registered in the database on or prior to\n31.12.2020.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Extension_in_Time_Period_to_Pass_Online_Proficiency_Test\"><\/span>Extension in Time Period to Pass Online\nProficiency Test<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Now, the Independent Director requires\nto complete the Online Proficiency Test within 2 years, starting from the date\nof inclusion of his\/ her name in the database. The said limit is increased in\nrespect of every individual or independent director whose name is included in\nthe official data; <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Relief_to_Bureaucrats_Foreign_Director_and_Public_Officials\"><\/span>Relief to Bureaucrats, Foreign\nDirector, and Public Officials<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>With these new amendments, MCA (Ministry of Corporate Affairs) has provided relief to Bureaucrats\/Foreign Directors and Public Officials who are also now qualified for an exemption from writing the test. Further, this exemption will enable the Indian companies or entities to retain and attract high caliber public officials as Directors.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Minimum_Marks_Condition\"><\/span>Minimum Marks Condition<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>An individual who has obtained a total\nscore of 50 or more shall be considered to have passed such a test.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Exemption_from_Clearing_Online_Proficiency_Test\"><\/span>Exemption from Clearing Online\nProficiency Test<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>After the introduction of the Companies\n(Appointment and Qualification of Directors) Fifth Amendment Rules 2020, an\nindividual is not be required to pass or clear the online proficiency\nself-assessment test if he\/she has served for a total tenure of not less than\nthree years, starting from the date of inclusion of his\/her name in the data\nbank. However, the said exemption will apply only if the said individual falls\nunder either of the categories as follows: <\/p>\n\n\n\n<ol><li>A Director or KMP (Key Managerial Personnel) Is working in one or more of the following types of organizations:<\/li><li>Listed public Company;<\/li><li>Unlisted <strong><a href=\"https:\/\/swaritadvisors.com\/public-limited-company-registration\" class=\"text-primary\">Public Company<\/a><\/strong>, which is having a paid-up share capital of Rs 10 crores or more;<\/li><li>Body Corporate or an entity listed on a Recognised Stock Exchange, which is having nationwide terminals or;<\/li><li>Body Corporate or an entity which is incorporated outside India and is having a paid-up share capital of the US $2 million or more;<\/li><li>Statutory Corporation, which is established under an Act of parliament or under any State Legislature carrying out the commercial activities;<\/li><li>A Director of the Ministry of Corporate Affairs (MCA) or the Ministry of Finance (MOF) or the Ministry of Commerce and Industry (MOCI) or the Ministry of Heavy Industries &amp; Public Enterprises (MOIPF) and who is having prior experience in handling the matters pertaining to the corporate laws or economic laws or securities laws;<\/li><li>The Chief General Manager (CGM) or above in the Securities and Exchange Board (SEBI) or the Reserve Bank of India (RBI) or the Insurance Regulatory and Development Authority of India (IRDA) or the Pension Fund Regulatory and Development Authority (PFRDA) and who is having a prior experience in handling the matters pertaining to the corporate laws or economic laws or securities laws;<\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Other_Announcements\"><\/span>Other Announcements<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Lastly, the Ministry of Corporate Affairs\ndeclared that for the calculation of the period of 3 years mentioned to in the\nfirst proviso, any tenure during which an individual was working as a director\nor as KMP (Key Managerial Personnel) in two or more companies or statutory\ncorporations or body corporates at the same time will be counted only once.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In a nutshell, the <strong>Ministry of Corporate Affairs (MCA<\/strong><sup><a href=\"http:\/\/www.mca.gov.in\/\"><strong>[1]<\/strong><\/a><\/sup><strong>) <\/strong>has published the Companies (Appointment &amp; Qualification of Directors) Fifth Amendment Rules 2020 as a reform of the Companies (Appointment &amp; Qualification of Directors) Rules 2014. <\/p>\n\n\n\n<p>Further, the main reason behind the\nimplementation was to provide a sense of relief to the Independent Directors in\nthe form of an extension of the time period for passing an online proficiency\ntest, and only a total of 50% weightage is needed to clear the exam.<\/p>\n\n\n\n<p>Furthermore, the individuals who have served as the designated directors, in the specified organisations of the Central Government, for a time period of not less than 3 years are not needed to appear for this exam. Also, the Foreign Directors, as well as the Bureaucrats\/Public officials, are exempted from appearing for the said test as well.<\/p>\n\n\n\n<p>Lastly, in case of any other doubt and complexity, reach out to <strong><a href=\"https:\/\/swaritadvisors.com\" class=\"text-primary\">Swarit Advisors<\/a><\/strong>, our expert professionals are ready to cater to all your requirements.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Official_Notification\"><\/span>Official Notification<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<a href=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2020\/12\/Co.-Appt.-Qltn-of-Directors-Fifth-Amnt-Rl-2020.pdf\" class=\"pdfemb-viewer\" style=\"\" data-width=\"max\" data-height=\"max\"  data-toolbar=\"bottom\" data-toolbar-fixed=\"off\">Co.-Appt.-Qltn-of-Directors-Fifth-Amnt-Rl-2020<br\/><\/a>\n<p class=\"wp-block-pdfemb-pdf-embedder-viewer\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recently, MCA (Ministry of&nbsp;Corporate Affairs), on 18.12.2020 had issued a Notification to inform that the Companies (Appointment and Qualification of Directors) Rules 2014 have been amended to the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules 2020. Further, such rules have come into force from the date of publishing in the Official Gazette, i.e., [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":725,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[50],"tags":[129],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/720"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=720"}],"version-history":[{"count":9,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/720\/revisions"}],"predecessor-version":[{"id":3419,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/720\/revisions\/3419"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/725"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=720"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=720"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=720"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}