Regulation 5 - Composition of the Governing Board. - Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016

CHAPTER III GOVERNING BOARD 1 [5. Composition of the Governing Board. - (1) The Governing Board shall consist of- (a) managing director; (b) independent directors; and (c) shareholder directors: Provided that the Governing Board shall have minimum seven directors. (2) The managing director shall not be considered either an independent director or a shareholder director. (3) Any employee of an insolvency professional agency may be appointed as a director on its Governing Board in addition to the managing director, but such director shall be deemed to be a shareholder director. (4) More than half of the directors shall be persons resident in India at the time of their appointment, and at all times during their tenure as directors. 3 [ (4A) A shareholder director shall be an individual, who satisfies the eligibility norms, including experience and qualification, as decided by the Governing Board. ] (5) The number of independent directors shall not be less than the number of shareholder directors: Provided that no meeting of the Governing Board shall be held without the presence of at least one independent director. (6) An independent director shall be an individual- (a) who is a person of ability and integrity; 4 [ (b) who has expertise in the field of finance, law, economics, accountancy, valuation, management or insolvency; ] (c) who is not an insolvency professional; (d) who is not a relative of the directors of the Governing Board; (e) who had or has no pecuniary relationship with the insolvency professional agency, or any of its directors, or any of its shareholders holding more than ten per cent. of its share capital, during the immediately preceding two financial years or during the current financial year; (f) who is not a shareholder of the insolvency professional agency; (g) who is not a member of the Board of Directors of any of the shareholders holding more than ten per cent. of the share capital of the insolvency professional agency. (7) An independent director shall be nominated by the Board from amongst the list of names proposed by the insolvency professional agency. (8) An individual may serve as an independent director for a maximum of two terms of three years each or part thereof, or up to the age of 2 [ seventy-five years], whichever is earlier. (9) The second term referred to in sub-regulation (8) may be subject to a satisfactory performance review of the first term by the Governing Board. (10) A cooling off period of three years shall be applicable for an independent director to become a shareholder director in the same or another insolvency professional agency. (11) Not more than one fourth of the directors shall be insolvency professionals. (12) The directors shall elect an independent director as the Chairperson of the Governing Board. (13) A director, who has, any interest, direct or indirect, pecuniary or otherwise, in any matter coming up for consideration at a meeting of the Governing Board or any of its Committees, shall as soon as possible after relevant circumstances have come to his knowledge, disclose the nature of his interest at such meeting and such disclosure shall be recorded in the proceedings of the Governing Board or the Committee, as the case may be, and the director shall not take part in any deliberation or decision of the Governing Board or the Committee with respect to that matter. ] 5 [ (14) A director shall disclose any order of any authority that affects his character or reputation, to the insolvency professional agency, within one week of issue of such order: Provided that a copy of the order shall be placed forthwith on the website of the insolvency professional agency; Provided further that such director shall forthwith cease to be a director of the insolvency professional agency where the order disqualifies him to be a director of a company. ] ******* Notes 1. Substituted vide Notification No. IBBI/2018-19/GN/REG35.vdated 11-10-2018 before it was read as Composition of the Governing Board. 5. (1) The Governing Board shall have a minimum of seven directors. (2) More than half of the directors shall be persons resident in India at the time of their appointment, and at all times during their tenure as directors. (3) Not more than one fourth of the directors shall be insolvency professionals. (4) More than half of the directors shall be independent directors at the time of their appointment, and at all times during their tenure as directors: Provided that no meeting of the Governing Board shall be held without the presence of at least one independent director. (5) An independent director shall be an individual- (a) who is a person of ability and integrity; (b) who has expertise in the field of finance, law, management or insolvency. (c) who is not an insolvency professional; (d) who is not a relative of the directors of the Governing Board; (e) who had or has no pecuniary relationship with the insolvency professional agency, or any of its directors, or any of its shareholders holding more than ten percent of its share capital, during the two immediately preceding financial years or during the current financial year; (f) who is not a shareholder of the insolvency professional agency; (g) who is not a member of a governing council of any of the shareholders holding more than ten percent of the share capital of the insolvency professional agency; and (6) The directors shall elect an independent director as the Chairperson of the Governing Board. Explanation - For the purposes of this Regulation, any fraction contained in (a) more than half shall be rounded off to the next higher number; and (b) not more than one- fourth shall be rounded down to the next lower number. 2. Substituted vide NOTIFICATION No. IBBI/2019-20/GN/REG043 dated 23-07-2019 before it was read as seventy years 3. Inserted vide Notification No. IBBI/2020-2021/GN/REG068 dated 14-01-2021 4. Substituted vide Notification No. IBBI/2020-2021/GN/REG068 dated 14-01-2021 before it was read as (b) who has expertise in the field of finance, law, management or insolvency; 5. Inserted vide Notification No. IBBI/2020-2021/GN/REG068 dated 14-01-2021