Mr. Sumant Batra, Vice-President of INSOL International, a worldwide federation of restructuring and insolvency practitioners, on Wednesday called for effective and efficient insolvency laws to protect the interest of investors.
He good insolvency laws were essential in attracting Foreign Direct Investment to different sectors of a country's economy.
Mr Batre was speaking at a public lecture on the topic: “Need for an effective Insolvency Regime in Emerging Economies in the Context of the Current Global Economic Downturn,in Accra on Wednesday.
He said a good exit law would provide investors the assurance and comfort that their interest would be protected in times of crisis.
The lecture was organized by the Ghana Association of Restructuring and Insolvency Advisors (GARIA), an association of insolvency practitioners in Ghana.
Mr Batra said while reforms of insolvency laws in developing economies had been slow due to focus on other areas of development, the trend was gradually catching up and most countries were now in the process of revising their laws.
According to him, the global economic crisis had shown that it would be impossible for developing economies to remain isolated from impacts of developments in the world economy and these required urgent measures to surmount any negative effects.
Mr Batra said efficient and effective insolvency regime could be possible when institutions, government and professionals in the field played their complementary roles to ensure that good benchmarks were set and achieved.
He said the role of institutions such as the Judiciary was paramount as no law could be successfully delivered unless judges understood the insolvency system and its meaningful role.
On the side of government, he said, it was important that the knowledge and capacity of the regulator be ahead of other stakeholders to enable it to police effectively new developments in the field and the activities of professionals.
Mr Batra emphasized the need for professional competence and urged that any insolvency reforms must provide for the role of practitioners, especially in institutionalising the practice as a discipline to promote accountability, integrity and qualification of persons who hold themselves out as insolvency practitioners.
He said while there were many insolvency regimes, it was important to follow one particular framework by drawing experiences from global guidelines and adapt them to suit domestic needs and urged that cross border insolvency should be part of domestic legislation.
Mr Seyi Akinwunmi, President of Business Recovery Professionals Association of Nigeria, called for a sub-regional response in dealing with issues involving insolvency.