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CS Professional · Insolvency and Bankruptcy - Law and Practice · Introduction to Insolvency and Bankruptcy Code

A new information utility is being set up and the Board is reviewing its governance structure. Under the Code, what may the Board require so that the utility takes into account the objectives sought to be achieved under the Code?

The Board may require every information utility to set up a governing board with the number of independent members specified by regulations. This ensures the utility takes into account the objectives of the Code. The Code does not require government nominees or a board made up only of professionals.

  1. AThat the utility set up a governing board with such number of independent members as specified by regulationsCorrect
  2. BThat the utility be managed only by nominees of the Central Government
  3. CThat the utility appoint a bankruptcy trustee for every debtor
  4. DThat the utility's governing board consist solely of insolvency professionals

Explanation

Section 212 empowers the Board to require every information utility to set up a governing board with the number of independent members specified by regulations, so that the utility takes into account the Code's objectives. The text says nothing about government nominees, appointing trustees or a board made only of professionals. Section 203 deals separately with insolvency professional agencies.

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