IPA governing board directors may be required to have certain minimum qualifications
The Insolvency and Bankruptcy Board of India (IBBI) has now proposed that the independent and shareholder directors in the governing board of the Insolvency professional Agencies (IPAs) should have certain minimum qualifications, experience and other requirements including, but not limited to being fit and proper.
The minimum qualification may include expertise in the field of finance, law, economics, management or insolvency.
In a draft paper floated by the insolvency regulator has noted that shareholder directors are appointed by the promoter institute and while the regulations require a director to be “fit and proper”, there are however, no requirements of suitability by way of minimum qualifications or professional experience under the existing law.
It, therefore, says that the governing board of the IPAs before approving any name for appointment as director should assess and certify that the person concerned is “fit and proper” as per the criteria laid down in the regulations and have the qualifications, experience and other requirements laid down.
IBBI has, thus, proposed amendments in the Model bye-laws governing IPAs enabling the Governing Board of the IPA to provide for certain minimum qualifications, experience and other requirements for appointments of both independent and shareholder directors.
This, says the draft paper, will ensure that the Governing Board of IPAs consists of directors with relevant expertise and would facilitate the IPAs in identifying challenges proactively and make appropriate course corrections as required so that the IPAs remain relevant in the ever-evolving market environment.
The draft paper also talks about the need to upgrade the quality of board deliberation in Governing Board of the IPAs to provide greater strategic focus. It, therefore, suggests that the governing board should discuss the themes like professional development, compliance, disciplinary matters, services to the members, strategy, technology, and human resources, etc.
It also asks the governing board of IPAs to do a periodic self-evaluation which could be broadly on three dimensions:
Board Composition and Quality: This could cover aspects such as expertise and experience of Board Members, strategy to achieve laid down objectives, quality of debate and discussion in its meetings and its engagement with stakeholders.
Board Meetings and Procedures: This could cover aspects such as regularity and frequency of Board meetings, accuracy of minutes, amount of time spent on strategic and important matters and follow up on actions arising from Board meetings.
Board Functions and Development: This includes aspects such as integrity of accounting and financial reporting, promoting transparency and good governance and open channels of communication with the top management.
A periodic self-evaluation by the Governing Board, it says, will ensure that it is fulfilling its duties and responsibilities and that appropriate processes are in place to ensure that Board is giving due diligence to planning and oversight over the organization.
Insolvency Professional Agencies (IPAs) are first line of regulatory body for insolvency professionals. IPAs monitor the conduct and performance of their members and also initiate appropriate action against their members who do not comply with the provisions of the Code.
An insolvency professional (IP) should obtain authorisation for assignment from the IPA before accepting or undertaking any assignment as interim resolution professional, resolution professional, liquidator, bankruptcy trustee, authorised representative or in any other role under the Code.
At present, there are three insolvency Professional Agencies (IPAs) — Indian Institute of Insolvency Professionals of ICAI, ICSI Institute of Insolvency Professionals and Insolvency Professional Agency of Institute of Cost Accountants of India.
