In exercise of the powers conferred by section 150 read with section 469 of the Companies Act

## Policy Analysis Report: Companies (Creation and Maintenance of databank of Independent Directors) Amendment Rules, 2021 **1. Executive Summary:** This report analyzes the Companies (Creation and Maintenance of databank of Independent Directors) Amendment Rules, 2021. This amendment modifies the existing Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019, by addressing potential delays in the inclusion or renewal of individuals in the independent director databank. The key change allows for inclusion or renewal even after a delay, subject to an additional fee. This aims to provide flexibility while potentially incentivizing timely applications. **2. Introduction:** This report aims to provide a detailed analysis of the Companies (Creation and Maintenance of databank of Independent Directors) Amendment Rules, 2021, based solely on the information provided in the official notification. The analysis will focus on the changes introduced by the amendment and their potential impact. **3. Policy Overview:** * This report analyzes an amendment to the Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019. * **Core Objective(s) (inferred):** The amendment aims to refine the process of maintaining the databank of Independent Directors, particularly by addressing situations where there are delays in applications for inclusion or renewal. This likely seeks to ensure a more comprehensive and up-to-date databank, while also introducing a mechanism to address administrative hurdles caused by late applications. **4. Background and Rationale:** The amendment likely addresses a practical issue encountered in the implementation of the 2019 Rules: delays in individuals applying for inclusion or renewal in the independent director databank. The amendment provides a mechanism to handle these delays, rather than strictly rejecting late applications. This suggests a need to balance the requirement for timely applications with the practicalities of administrative processes and the desire to maintain a broad pool of eligible independent directors. **5. Key Provisions / Changes:** The Companies (Creation and Maintenance of databank of Independent Directors) Amendment Rules, 2021 introduces the following changes to the Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019: * **Change 1:** In Rule 3, sub-rule 7, clause (a), after the words "for inclusion", the words "or renewal" shall be inserted. * **Effect:** This clarifies that the existing provisions of sub-rule 7(a) also apply to the renewal of names in the databank, not just the initial inclusion. * **Change 2:** A new sub-rule 8 is inserted after sub-rule 7 and before the explanation. * **New Rule (Sub-rule 8):** "In case of delay on the part of an individual in applying to the institute under subrule 7 for inclusion of his name in the data bank or in case of delay in filing an application for renewal thereof, the institute shall allow such inclusion or renewal, as the case may be, under rule 6 of the Companies Appointment and Qualification of Directors Rules, 2014 after charging a further fees of one thousand rupees on account of such delay." * **Effect:** This new rule explicitly allows the institute to approve inclusion or renewal applications that are submitted late, provided a further fee of one thousand rupees is paid. This introduces a financial penalty for delayed applications but ensures that individuals are not automatically excluded from the databank due to timing issues. It references Rule 6 of the Companies Appointment and Qualification of Directors Rules, 2014, likely related to the specific procedures for appointment and qualification processes. **6. Target Audience and Stakeholders:** The direct target audience and stakeholders affected by these amendments are: * Individuals seeking inclusion or renewal in the databank of independent directors. * The "institute" responsible for maintaining the databank, likely the Indian Institute of Corporate Affairs (IICA) or another designated body, as it has the responsibility of implementing these changes and collecting the additional fees. **7. Implementation Aspects (Inferred):** * **Responsible agency:** The "institute" mentioned in the amendment is responsible for implementing the changes, specifically collecting the additional fee and processing late applications. * **Timelines/Procedures:** The amendment does not specify any changes to the existing timelines for application or renewal, only addressing situations where delays occur. The implementation requires the institute to establish a process for collecting the additional fee of one thousand rupees. * Rule 6 of the Companies Appointment and Qualification of Directors Rules, 2014 is referenced, suggesting that the inclusion/renewal process is tied to these existing director appointment and qualification rules. **8. Expected Outcomes / Impact of Changes:** The likely intended outcomes of these changes are: * **Reduced administrative burden:** By allowing for late applications with a fee, the amendment likely aims to reduce the administrative burden associated with strictly enforcing application deadlines. * **Increased comprehensiveness of the databank:** The flexibility offered by this amendment may lead to a more comprehensive databank, as individuals who might have been excluded due to late applications can now be included. * **Revenue generation:** The additional fee of one thousand rupees could generate additional revenue for the institute. * **Incentive for timely applications:** The additional fee also serves as an incentive for individuals to submit their applications and renewals on time. **9. Conclusion:** The Companies (Creation and Maintenance of databank of Independent Directors) Amendment Rules, 2021, introduces targeted changes to the 2019 Rules by addressing the issue of delayed applications for inclusion or renewal in the independent director databank. The amendment provides a mechanism to handle such delays through an additional fee, balancing flexibility with the need for timely submissions. This change aims to improve the comprehensiveness and efficiency of the independent director databank.

Key Entities Referenced