Independent Director: Senior CA Resigns Citing Lack of Time to Study for MCA Proficiency Test!
A chartered accountant (CA), with 30 years of experience, has resigned as independent director from a listed company citing lack of time to attend the affairs of the company and study and appear for the proficiency test as mandated by the ministry of corporate affairs (MCA).
CA Anjali S Dalvi has resigned from Jenburkt Pharmaceuticals Ltd as independent director on 7 February 2020. In her resignation letter she says, "I was given to understand that the MCA has made it mandatory for all independent directors to register themselves as also appear for a proficiency test thereafter. I am a CA qualified in January 1990 and I have a 30 year experience. I have also commenced my own venture since 2019. These activities are taking up most of my working hours and I am finding it difficult to attend to the affairs of Jenburkt (Pharmaceuticals) let alone find time to study and appear for tests. Considering the time at my disposal I am finding it difficult to comply with the new norms laid down by the MCA."
Last year in October, MCA issued a notification making it mandatory for independent directors to get listed with a central database, and to qualify under proficiency test. The amendments become effective from 1 December 2019.
Vinita Nair, who is company secretary (CS) and partner at Vinod Kothari & Co, feels the idea of the board report reporting their directors’ performance in the so-called proficiency test is even more bizarre.
There are training workshops and skill building courses for non-executive directors run all over the world, but that a director should mandatorily sign for one such test and qualify under the same with 60%, seems exceptional.
In addition, the question of testing a person for any “proficiency” arises only when a director is expected to have such common proficiency. Normally, companies appoint directors who have core skills or expertise or competencies required for the business or sector.
The contents of the common proficiency test, such as company law, securities law and basic accountancy, seem to be eminently suited to corporate professionals.
Corporate boards have to have diverse skills – technical, behavioural, industrial, and so on. How does a common proficiency test assess the capability, for example, of a person, who has technical competence on the line of business that the company is engaged in? Ms Nair asks.