Standards expected of a resolution professional are very high: ICSI Prez

Shyam Agrawal discusses how the institute is updating its training programmes for RPs based on experiences on the ground, and the implications of recent changes in secretarial standards

The Institute of Company Secretaries of India (ICSI) is one of the certifying and training bodies for resolution professionals (RPs) under the Insolvency and Bankruptcy Code (IBC). In an interaction with Sudipto Dey, Shyam Agrawal, president, ICSI, discusses how the institute is updating its training programmes for RPs based on experiences on the ground, and the implications of recent changes in secretarial standards. Edited excerpts:

What have been the key challenges faced by RPs in operationalising the Code?

One of the biggest challenges faced by RPs is with regard to taking over the management of the company. The instances of RP facing resistance and non-cooperation from the management are on the rise now. The reason for the same is not difficult to fathom as an RP is an outsider. The resistance would be stronger in promoter-managed companies. However, it is where an RP needs to come up to the mark and explain to the management that the takeover is for the betterment of the company. The framers of the Insolvency and Bankruptcy Code, 2016, had thought of such a situation and therefore, power has been vested in the NCLT (National Company Law Tribunal) to pass appropriate directions to direct assistance or cooperation to the RP. 

Recently, the Chennai Bench of the NCLT passed an order directing the superintendent of police of the area, where company was located, to give police protection (to the RP). In another instance, the NCLT had to stay the proceedings of an FIR against an RP for bona fide work done by him under the IBC. In another interesting matter, when the RP went to take over the management of the company, he was asked to come the next day. The next day, he saw that there was no plant, machinery, tools, equipment, workers, etc, at the site. The officials of the company refused to hand over the financial documents of the company. In such a scenario, the RP had to approach the NCLT. Apart from these, maintaining the time limit of 180 days under the Code is also a daunting task for an insolvency professional. 

Questions are being raised on some of the actions taken by RPs. Do you feel the need for a code of conduct?

We have to appreciate that a profession is different from a business. Professionals have always been revered in every society. Furthermore, insolvency is a ‘profession out of profession’. So, the standards expected of an RP are very high. There is already a code of conduct in place for RPs. However, it is the effective implementation by the statutory authority as well as an insolvency professionals agency (IPA), within its institutional framework, which would help keep checks on RPs. Every action of RPs must be backed by papers to justify their actions.

Are you making any changes in the way you prepare RPs for the situation?

Our training structure is constantly evolving. We keep a continuous track of latest judgments in the field of insolvency and identify the practical challenges being faced by RPs. We structure our programmes to equip RPs to face these challenges. Our approach is more practical based. We invite faculty from among the senior members of the profession who have handled the cases and have a first-hand experience of such situations. We also cover aspects related to taking over of a business, running the business as a going-concern and working with the management, court craft, negotiation with creditors and other stakeholders, scrutiny of the resolution plan, etc.

We are also at an advanced stage to enter into a tie-up with the BFSI Sector Skill Council to create insolvency associates who would be hired by insolvency professionals (to assist and support them). This will create employment opportunities for the budding professionals.

The institute recently revised the secretarial standards. What should companies watch out for when it comes to meeting compliance requirement under the new standards?

The revisions in the secretarial standards (SS-1 & SS-2) have been made in view of changes in the Companies (Amendment) Act, 2015, the amendments to the rules notified by the Ministry of Corporate Affairs, relaxations aimed to further ease of doing business, and to remove the interpretation issues, among others.

The revised SS-1 and SS-2 are applicable to all the companies (except the exempted class of companies) from October 1, 2017. Accordingly, all board meetings (including meetings of committees of board) and general meetings in respect of which notices are issued on or after October 1, need to comply with the revised SS-1 and SS-2. A comparative analysis of revised secretarial standards vis-à-vis existing secretarial standards is placed on the ICSI website.

What is the status of institute’s efforts to strengthen and streamline decision-making in gram panchayats?

Transparency and governance are the key to success for any institution. Gram panchayats being institutions of local self-government, the effective participation, discussion and decision-making at the meetings of the panchayats are key facilitators to achieve the good governance mission of the government. Keeping this in mind, the ICSI will shortly release a “Model Governance Code for Meetings of Gram Panchayats” to facilitate the standard practices in convening of these meetings. The fundamental principles with respect to governance of gram panchayats meetings are laid down in the respective state laws. This Model Governance code will strive to supplement such laws.