Advisory Committee explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 5(c) lets the appropriate regulator constitute an Advisory Committee within 45 days of the insolvency commencement date. It advises the Administrator on the resolution process, is paid out of the process costs, and is chaired by the Administrator.
Constitution and timing
- The appropriate regulator may, where deemed necessary, constitute an Advisory Committee.
- It must be constituted within 45 days of the insolvency commencement date.
- It consists of three or more members.
- The Administrator chairs its meetings.
- Compensation paid to members forms part of the insolvency resolution process costs.
Two words in the rule do a lot of work. "May" makes the committee optional, so a straightforward FSP resolution need not carry the cost. "Within 45 days" means that if it is to exist at all, it must be in place early enough to be useful — an advisory body constituted at the end of a 180-day process would be advising on decisions already taken.
Who can be a member
Members must be persons of ability, integrity and standing with expertise or experience in:
- finance, economics, accountancy or law;
- public policy;
- any other profession in the area of financial services; or
- risk management, administration, supervision or resolution of a financial service provider.
The qualifications go beyond the commercial and accounting skills an ordinary resolution demands, and reach into public policy and the supervision and resolution of financial firms.
That reflects what is actually at stake. Decisions in a financial service provider's insolvency touch depositors, policyholders, investors and the payment relationships of people who are not creditors at all. The Advisory Committee exists so the Administrator has that perspective available in the room, alongside the committee of creditors' commercial view.
What it is, and what it is not
| Advisory Committee | Committee of creditors | |
|---|---|---|
| Constituted by | The appropriate regulator, at its discretion | The Administrator, from the FSP's financial creditors |
| Membership | Three or more experts | Financial creditors by voting share |
| Function | Advises the Administrator | Decides — approves the resolution plan and the major process decisions |
| Chair | The Administrator | The Administrator convenes; decisions are by voting share |
| Cost | Compensation is part of insolvency resolution process costs | Members bear their own costs |
The Advisory Committee has no decision-making power. It does not approve the resolution plan, it does not replace the Administrator and it does not displace the commercial wisdom of the committee of creditors. Its output is advice — which is why the Administrator can chair it without a conflict arising.
Why the compensation rule matters
Making the members' compensation part of the insolvency resolution process costs has two consequences. It is paid in priority, ahead of creditors, in the same way as the Administrator's fee and other process costs — so members are not asked to serve at the risk of a dividend. And it is disclosed and accounted for as part of the process costs, rather than being an unquantified charge on the estate.
Practical points
- Diarise the 45 days from the insolvency commencement date, not from the Administrator's appointment.
- Record the Advisory Committee's advice and the Administrator's decisions separately — the responsibility for the decision remains with the Administrator.
- Budget the compensation as a line in the process costs from the outset.
- Where the regulator does not constitute one, note that nothing else supplies the same expertise.
Common mistakes
- Treating the Advisory Committee as a decision-making body, or as a substitute for the committee of creditors.
- Assuming it is mandatory in every FSP insolvency.
- Counting the 45 days from the date of the application rather than the commencement date.
- Paying members outside the process costs.