The Insolvency and Bankruptcy Board of India (IBBI) issued a circular notifying the governance structure of the Registered Valuers Organisations (RVOs).
The Board empowered under clauses (e), (g) and (i) of rule 14 of the Companies (Registered Valuers and Valuation) Rules, 2017 issued the circular on Thursday seeks to address All Recognised Registered Valuer Organisations (RVOs) and states that members of the issuer organization cannot be an independent director in the registered valuers’ organization.
The board while keeping in mind the powers and responsibilities of the Recognised Registered Valuer Organisations (RVOs) prescribed minimum norms of governance befitting a regulatory State, which elaborates on the composition of the Governing Board of an RVO, and manner of discharge of its powers and functions.
Rule 14(5)(4) of the Insolvency and Bankruptcy Board of India mandates that an independent director shall be an individual, who has expertise in the field of finance, law, management or valuation; who is not a registered valuer; who is not a shareholder of the registered valuer’s organization; and who fulfills the requirements under subsection (6) of section 149 of the Companies Act, 2013.
Further, the rules specify, “the Chairperson of the Governing Board of an RVO shall be an independent director.”
The circular said, “In the meetings with MDs/CEOs of the RVOs, tḥe issue of eligibility to be an independent director has been discussed a few times, in view of the likely conflict of interests. It has been clarified that a member of the promoter organization, which has promoted an RVO, shall not be an independent director in the RVO.”
“A promoter organization may have its members- shareholder members in case the promoter is a company, a trustee in case the promoter is an association of persons/ trust or a professional member in case the promoter is a professional body – as directors on the Governing Board of the RVO. However, such directors shall not be appointed as independent directors. Illustratively, a share-holder / professional member of the Institution of Valuers (IOV), who is a director on the Governing Board of the IOV RVO or a professional member of the ICAI, who is a director on the Governing Board of the ICAI RVO shall not be considered as an independent director for the purposes of sub-clause (5) of clause (4) of Part -I of Annexure – III of the Rules. It is further advised that if any RVO does not have the composition of its Governing Board taking this clarification into account shall reconstitute the Governing Board within three months from the date of the issue of this Circular to meet this requirement,” the board said while giving an illustration.
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