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Governing Board of Insolvency Professional Agency under Section 203 IBC

Updated 11 October 2026 · Fact-checked

Section 203 of the IBC lets the Insolvency and Bankruptcy Board of India (IBBI) make regulations on the governing board of an insolvency professional agency (IPA). The regulations specify how the board is set up, the minimum number of independent members, and the number of insolvency professional members on it.

Understand Governing Board of Insolvency Professional Agency

An insolvency professional agency (IPA) is a body registered with the Board. It enrols insolvency professionals as its members and regulates them. Because an IPA holds this power over professionals, the Code wants its own management to be sound and not captured by one group.

This is the purpose of Section 203. It does not fix the board's size or composition in the Code itself. It gives the Board (IBBI) the power to make regulations. The Board may make them "for the purposes of ensuring that every insolvency professional agency takes into account the objectives sought to be achieved under this Code".

The section covers three matters. First, the setting up of a governing board of the IPA. Second, the minimum number of independent members on that board. Third, the number of insolvency professionals who are members of the IPA who shall sit on the board.

So the section is an enabling provision. In an exam, say that the details come from IBBI regulations. Do not invent numbers. If the question gives you the regulation figures, apply them. If it does not, state the three heads and the regulation-making power.

Read it with Section 200 (principles for registering IPAs), Section 201 (registration) and Section 204 (functions of IPAs). The governing board is the structure through which an IPA carries out those functions and meets those principles. Section 212 is a parallel rule for an information utility, which also needs a governing board with independent members.

Key rules to remember

Regulation-making power: Section 203: the Board may make regulations on (a) setting up of governing board, (b) minimum number of independent members, (c) number of IP members on the board; The Code does not state the numbers. They are left to IBBI regulations.
Purpose of the power: To ensure every IPA takes into account the objectives sought to be achieved under the Code; Quote this purpose in answers on why the section exists.
Parallel rule for information utility: Section 212: the Board may require every information utility to set up a governing board with such number of independent members as specified by regulations; Do not mix it up with Section 203. Section 212 deals with information utilities, not IPAs.
Related sections for IPAs: Section 199 (no functioning without registration); Section 200 (principles); Section 201 (registration); Section 204 (functions); Use these to link the governing board to the wider framework.

How to solve Governing Board of Insolvency Professional Agency questions

Use this method for any question on the governing board of an IPA, whether it is a short note, a case or a drafting-style question.

1Identify the body. Confirm that the question is about an IPA and not an information utility or an insolvency professional.
2State the provision. Cite Section 203 and say that it empowers the Board (IBBI) to make regulations.
3List the three matters: setting up of the governing board, minimum number of independent members, and number of IP members on the board.
4Apply the facts. Check what the question says about the board, such as the number of independent members or the IP members, and compare it with any regulation figures given.
5Link to the purpose. Say that the aim is to make the IPA take into account the objectives of the Code, and tie this to Sections 200 and 204 where relevant.
6Conclude clearly. State whether the board's structure is in line with the regulations, or what the Board can do, such as issue a show cause notice under Section 219 or act under Section 201(5).

Quickest way: Three-heads recall

When to use it: Use it for a short note or a 5-mark answer when time is tight.

Write: Section 203 empowers the Board to make regulations for the governing board of an IPA.
List the three heads: (a) setting up, (b) minimum independent members, (c) number of IP members.
Add the purpose in one line: to make the IPA take into account the Code's objectives.
Close with one link: Section 212 gives a similar rule for information utilities, and Section 204 lists the IPA's functions.

Common mistakes in Governing Board of Insolvency Professional Agency

Stating fixed numbers of independent members as if they are in Section 203.
Students remember regulation figures and assume they sit in the Code.
Fix: Say that Section 203 only empowers the Board to specify the numbers by regulations. Give figures only if the question supplies the regulation.
Confusing Section 203 with Section 212.
Both deal with governing boards and independent members.
Fix: Section 203 is for insolvency professional agencies. Section 212 is for information utilities.
Saying the IPA itself frames the board structure.
Students think of bye-laws and miss the regulation-making power.
Fix: State that the Board (IBBI) makes the regulations under Section 203. The IPA then follows them.
Missing one of the three heads.
Students remember only 'independent members'.
Fix: Recall setting up, independent members, and IP members as three separate clauses (a), (b) and (c).
Ignoring the consequence of non-compliance.
Students stop at describing the board.
Fix: Add that failure to follow the regulations is a ground to suspend or cancel registration under Section 201(5)(b), after a reasonable opportunity of being heard.

Worked examples

Example 1

Explain the power of the Insolvency and Bankruptcy Board of India under Section 203 of the IBC in relation to the governing board of an insolvency professional agency.

Show the solution

Section 203 allows the Board to make regulations relating to the governing board of an IPA.
The purpose is to ensure that every IPA takes into account the objectives sought to be achieved under the Code.
The regulations may specify the setting up of a governing board of the IPA.
They may specify the minimum number of independent members on that board.
They may specify the number of insolvency professionals, who are members of the IPA, to be on the board.

Answer: Under Section 203 the Board may make regulations on three matters: setting up the IPA's governing board, the minimum number of independent members, and the number of IP members on it. The aim is that every IPA takes into account the Code's objectives. The Code leaves the exact numbers to the regulations.

Example 2

An IPA registered under the IBC has a governing board that does not meet the composition required by the Board's regulations. Advise what consequences may follow.

Show the solution

Identify the rule: Section 203 lets the Board make regulations on the governing board's composition, including independent members.
A board that does not meet those regulations means the IPA has failed to comply with the regulations made by the Board.
Section 201(5)(b) lists failure to comply with the regulations as a ground to suspend or cancel the certificate of registration.
Before that, the Board can act on a complaint or on reasonable grounds under Section 218 and order an inspection or investigation.
After the inspection or investigation, the Board may issue a show cause notice under Section 219.
No suspension or cancellation order can be made without giving the IPA a reasonable opportunity of being heard, and it cannot be passed by any member other than whole-time members of the Board.

Answer: The IPA has failed to comply with the Board's regulations made under Section 203. The Board may order an inspection or investigation (Section 218) and issue a show cause notice (Section 219). It may suspend or cancel the registration under Section 201(5)(b), but only after giving the IPA a reasonable opportunity of being heard.

Exam tips

Start every answer with the section number and the words 'the Board may make regulations'. This shows you know it is an enabling provision.
Write the three heads (a), (b) and (c) in a short list. Examiners look for all three.
Do not quote numerical limits unless the question gives them or you are certain of the current regulation.
In case questions, connect composition defects to Sections 201(5), 218 and 219 to show the consequence.
Distinguish clearly between IPA (Section 203) and information utility (Section 212) if both appear in a question.

Practice questions from Insolvency

Governing Board of Insolvency Professional Agency: frequently asked questions

What does Section 203 of the IBC deal with?

It deals with the governing board of an insolvency professional agency. It empowers the Board (IBBI) to make regulations on setting up the board, the minimum number of independent members, and the number of insolvency professionals on it.

Does Section 203 fix the number of independent members?

No. The section only empowers the Board to specify the minimum number through regulations. The figure comes from those regulations and not from the Code.

Is the governing board rule for information utilities the same as Section 203?

No. Section 212 is a separate provision. It allows the Board to require every information utility to set up a governing board with the number of independent members specified by regulations.

What can happen if an IPA does not follow the regulations on its board?

Failure to comply with the Board's regulations is a ground under Section 201(5) to suspend or cancel the certificate of registration. The IPA must first be given a reasonable opportunity of being heard.