Section 193 of the Insolvency and Bankruptcy Code, 2016: Member Not to Participate in Meetings in Certain Cases
Section 193 addresses conflict of interest at meetings of the Insolvency and Bankruptcy Board of India. Where a member is a director of a company and, in that capacity, has a direct or indirect pecuniary interest in a matter before the Board, the member must disclose the interest and must not participate in deliberation or decision on that matter.
Section 193 - Statutory Provision
Any member, who is a director of a company and who as such director has any direct or indirect pecuniary interest in any matter coming up for consideration at a meeting of the Board, 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 Board, and the member shall not take any part in any deliberation or decision of the Board with respect to that matter.
Meaning and Scope of Section 193
The provision establishes a statutory conflict-of-interest safeguard for specified matters considered by the IBBI. Its operation depends on the circumstances stated in the section: the member is a director of a company and, as such director, has a direct or indirect pecuniary interest in a matter coming before a meeting of the Board.
Direct or Indirect Pecuniary Interest
For the purpose of the section, the relevant interest is a pecuniary or financial interest connected with the member's position as a director of a company. The statutory language covers both direct and indirect pecuniary interests.
Duty to Disclose
Once the relevant circumstances come to the member's knowledge, Section 193 requires disclosure of the nature of the interest at the meeting as soon as possible. The disclosure is therefore not merely informal; it must be made at the Board meeting dealing with the matter.
Disclosure Must Be Recorded
The section expressly requires the disclosure to be recorded in the proceedings of the Board. This creates a formal record of the disclosed interest in the meeting proceedings.
Non-Participation in Deliberation or Decision
After the statutory conflict arises, the member must not take any part in any deliberation or decision of the Board concerning that matter. The restriction therefore extends to both discussion and decision-making.
Requirements Under Section 193
| Requirement | Effect |
|---|---|
| Member is a director of a company | The section applies where the specified interest arises in the member's capacity as such director. |
| Direct or indirect pecuniary interest | The interest must relate to a matter coming up for consideration at a Board meeting. |
| Disclosure | The member must disclose the nature of the interest as soon as possible after becoming aware of the relevant circumstances. |
| Recording | The disclosure must be recorded in the proceedings of the Board. |
| Recusal | The member must not participate in deliberation or decision on that matter. |
Related IBC Provisions
Section 189: Provides for the constitution of the Insolvency and Bankruptcy Board of India.
Section 191: Provides for the powers of the Chairperson.
Section 192: Governs meetings of the Board, including procedure, presiding authority and voting.
Section 194: Deals with the effect of vacancies and specified defects on proceedings of the Board.
Section 196: Sets out the powers and functions of the Board.
Official Legal Resources
India Code - Central Acts and Legislation