IBBI Amends Regulations To Appoint Its Nominee Directors On Insolvency Professional Agency Governing Boards
The Insolvency and Bankruptcy Board of India (IBBI) has amended its regulations to provide for appointment of its nominee director on the governing board of an insolvency professional agency (IPA), with the nominee enjoying the same status, rights, duties, powers and responsibilities as other directors.
The change has been introduced through amendments to the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016.
“The Board shall nominate one individual as its nominee director on the Governing Board of an insolvency professional agency, and such nominee director shall have the same status, rights, duties, powers and responsibilities as other directors of the governing board,” the Gazette notification states.
The amendment also clarifies that nominee directors will be excluded while calculating the minimum requirement of seven directors on the governing board of an IPA.
Further, new eligibility conditions have been introduced for independent directors, including that they should not be members of statutory regulators that have sponsored or promoted the IPA, or directly or indirectly hold shareholding in or exercise control over it, and should not simultaneously serve as independent directors of another insolvency professional agency.
The regulations also provide that a managing director's second term will be subject to a satisfactory performance review by the governing board and prior approval of the IBBI. For obtaining prior approval for the appointment or renewal of a managing director, an IPA will have to send at least two names to the IBBI at least one month before the expiry of the incumbent's tenure.
Insolvency Professional Agencies are entities recognised by the IBBI to enrol, monitor and regulate insolvency professionals under the Insolvency and Bankruptcy Code.
The three recognised IPAs in India are the Indian Institute of Insolvency Professionals of ICAI, ICSI Institute of Insolvency Professionals and the Insolvency Professional Agency of the Institute of Cost Accountants of India.