Govt clearance must for companies to appoint Chinese directors on board

According to an MHA notification, it will be mandatory for companies to seek clearance from the government before appointing directors from land-border sharing nations on their boards

The Ministry of Home Affairs issued a notification on June 2, stating that citizens from land-border sharing nations need security clearance from the government before they are appointed as directors on boards of Indian companies, according to reports.

The government has notified the Companies (Appointment and Qualification of Directors) Amendment Rules, 2022  to amend the Companies (Appointment and Qualification of Directors) Rules, 2014. 

In effect, this amendment will make it mandatory for the companies to seek clearance from the government before appointing directors on boards.

What has changed?

In Rule 8, the following proviso has been inserted: “Provided further that