Module: | SEBI LODR & Corporate Governance Frameworks
Q23: Consider the following statements regarding the Independent Directors Databank and the online proficiency self-assessment test administered by the IICA:
1. An individual enrolled in the databank is required to clear the online proficiency self-assessment test within a maximum period of two years from the date of their inclusion.
2. Professionals such as Chartered Accountants or Advocates who have been in practice for at least 10 years are granted an explicit statutory exemption from passing the proficiency test.
3. The Companies Act strictly sets the minimum age required to register in the databank and attempt the proficiency test at 21 years.
Which of the above statements is/are correct?
2. Professionals such as Chartered Accountants or Advocates who have been in practice for at least 10 years are granted an explicit statutory exemption from passing the proficiency test.
3. The Companies Act strictly sets the minimum age required to register in the databank and attempt the proficiency test at 21 years.
Which of the above statements is/are correct?
✅ Correct Answer: A
🎯 Quick Answer:
A. Only 1 and 2 are correct.Structural Breakdown: Statement 1 is correct; the legal window to clear the self-assessment test is two years from databank inclusion.
Statement 2 is correct; seasoned professionals with over a decade of practice in designated fields are presumed to have the necessary expertise and are exempt.
Statement 3 is incorrect; the Companies Act does not specify a minimum age to take the exam.
While an individual must be 18 to legally contract as a director, the 21-year minimum age limit applies strictly to listed entities under SEBI regulations, not to the Databank exam itself.
Historical/Related Context: The Databank was established to elevate the standard of independent directors, shifting them from being passive board members appointed through personal networks to qualified professionals capable of challenging promoters.
Causal Reasoning: The two-year timeline ensures that newly enrolled individuals rapidly acquire the necessary legal and financial literacy required to protect minority shareholder interests before deeply entrenching themselves in board roles.