Chartered accountants' apex body ICAI Thursday said it has constituted a nine-member panel to study the systemic issues in the IL&FS crisis, amid the government intensifying efforts to address the problems at the diversified group.
Chartered accountants’ apex body ICAI Thursday said it has constituted a nine-member panel to study the systemic issues in the IL&FS crisis, amid the government intensifying efforts to address the problems at the diversified group. The setting up of the committee by the ICAI comes days after it sought explanation from audit firms that carried out statutory audit works at the IL&FS Group in the past few years.
The Institute of Chartered Accountants of India (ICAI), which has more than 2.95 lakh members, has also written to the Reserve Bank of India and the Serious Fraud Investigation Office seeking details about IL&FS issue. In a release issued Thursday, ICAI said it has set up a high power group that “would study the systemic issues in the IL&FS matter and suggest remedial measures and improvement in the system and any other matter incidental thereto”.
The nine-member panel is headed by S B Zaware and has two past ICAI Presidents — Ved Jain and Nilesh Shivji Vikamsey — as members. According to an official at the institute, Jain was the President of the institute during the time of Satyam Computer Services crisis in 2008 and that he has experience of handling such situations.
Like in the case of Infrastructure Leasing & Financial Services (IL&FS), the government had also superseded the board of erstwhile Satyam Computer, which was embroiled in one of the biggest accounting scams. On Wednesday, the ICAI said that based on the responses from the RBI and the SFIO, it would be fast-tracking its investigation on the role of member /firm of the institute allegedly involved in terms of the disciplinary mechanism.
On October 1, the government superseded the board of IL&FS and appointed a six-member board with Uday Kotak as the non-executive chairman. In a significant development, the National Company Law Tribunal (NCLT) has allowed the new board of directors to “replace” directors at subsidiaries, joint ventures and associate companies of IL&FS.
As per the Corporate Affairs Ministry, IL&FS Group has around 348 direct or indirect subsidiaries, associate companies and joint ventures. Further, the NCLT, in an order dated October 9, said that “actions of the newly-appointed directors done in the good faith, in the interest of the company, various stakeholders, including public at large, the same are protected”.
The tribunal also allowed the new board to elect among themselves anyone as whole-time director and/ or managing director. In this regard, “no further procedure prescribed in the Memorandum/ Articles of Association of R1 company (IL&FS) and the procedures prescribed under the Companies Act, 2013 or rules made thereunder are required to be followed in the instant case”, the NCLT said. The crisis at Infrastructure Leasing & Financial Services (IL&FS) has rattled financial markets by sparking off concerns of liquidity crunch.