According to insiders, the Indian Institute of Corporate Affairs (IICA) is about to launch a unique course designed to help independent directors (IDs) understand financial statements more clearly. Also, as per one credible source, "people who are likely to become or are already members of an audit committee would particularly benefit from the course." The government believes that firm directors failed to see warning indications of problems, and recent corporate frauds have brought attention to these directors. On the other hand, IDs are now more conscious of and outspoken about errors and conflicts in business matters.
This month, Nisaba Godrej announced her resignation from the board of VIP Industries, a manufacturer of luggage and travel accessories, citing differences in her beliefs about succession planning, leadership, and responsibility. The reason for Marc Desaedeleer's resignation from the Suzlon Energy board was "transparency". Another example is the financially troubled Paytm Payments Bank, whose independent directors have left the company for private reasons.
To guarantee a fair and transparent audit process, IDs are needed on audit committees. According to reports, there was a need to teach them the fundamentals of accounting and auditing so they could see warning signs and pose pertinent queries. The IICA has over 29,000 independent directors on file. Experts believe that a particular training will improve corporate governance and comply with Section 149(6) of the Companies Act of 2013, which highlights the significance of honesty and expertise for IDs.
Sonam Chandwani, Managing Partner of KS Legal & Associates, stated, "By providing them with strong financial literacy, the IICA is not only promoting compliance but also mitigating potential legal liabilities arising from financial mismanagement or oversight." The government introduced a requirement for IDs to pass a qualifying exam that would set a baseline standard in October 2019 and went into effect in December of that same year. The test is given by the IICA.
The required self-assessment exams were exempted for a number of professionals, including practicing chartered accountants, corporate secretaries, cost accountants, and advocates of court with more than ten years of experience. A third of the board members of all listed businesses must be independent directors according to company law. They supervise matters independently of the company and make sure minority shareholders' interests are safeguarded.
