How to Become an Insolvency Professional
How to Become an Insolvency Professional
To improve the process for insolvency resolution, the Insolvency and Bankruptcy Board of India was established on October 1, 2016 in accordance with the provisions of The Insolvency and Bankruptcy Code, 2016. The Insolvency and Bankruptcy Board of India is tasked with providing an smooth and time bound insolvency resolution process for companies, LLPs, partnership firms and individuals. In this article, we look at the process for becoming an Insolvency Professional as per the rules and regulations laid out by the Insolvency and Bankruptcy Board of India.
Insolvency Resolution
Insolvency resolution is an important part of the credit market required to maintain a vibrant credit market. Insolvency resolution thus involves maximization of the value of assets of an insolvent person and ensure availability of credit and balance to the interests of all the stakeholders. The entire insolvency resolution process is managed by an Insolvency Professional, who has been appointed or designated by the Insolvency and Bankruptcy Board of India as an Insolvency Professional. Persons who qualify under the following eligibility criteria are eligible to become an insolvency professional.
Eligibility Criteria for Becoming Insolvency Professional
The following are some of the basic eligibility criteria for becoming an insolvency professional:
- The Insolvency Professional must be a major, over the years of 18.
- The Insolvency Professional must be a resident of India.
- The Insolvency Professional must not have been convicted by any competent court for an offence punishable with imprisonment for a term exceeding six months or for an offence involving moral turpitude, and a period of five years has not elapsed from the date of expiry of the sentence.
- Any person who has been convicted of any offence and sentenced to imprisonment for a period of seven years or more, is not eligible to be registered as an Insolvency Professional.
- The Insolvency Professional must not have been an undischarged insolvent, or has applied to be adjudicated as an insolvent.
- The Insolvency Professional must be of sound mind and a fit and proper person. To judge if a person is fit and proper, the following criteria’s are considered:
- Integrity, reputation and character.
- Absence of convictions and restraint orders.
- Competence, including financial solvency and net worth.
Qualification and Experience Required for Becoming an Insolvency Professional
The following four routes are available for becoming an Insolvency Professional:
Passing the National Insolvency Examination
To become an Insolvency Professional, the eligible person must have passed the National Insolvency Examination. The National Insolvency Examination will be held from time to time by the Insolvency and Bankruptcy Board of India.
Passing the Limited Insolvency Examination + Bachelors Degree + 15 Years Experience
Also, any person who is eligible can become an Insolvency Professional by passing the Limited Insolvency Examination, if he/she has fifteen years of experience in management and a Bachelor’s degree from a university established or recognized by law.
Passing the Limited Insolvency Examination + Professional Qualification
A eligible person can become an Insolvency Professional by passing the Limited Insolvency Examination having 10 years experience as:
- A Chartered Accountant enrolled as a member of the Institute of Chartered Accountants of India.
- A Company Secretary enrolled as a member of the Institute of Company Secretaries of India.
- Cost Accountant enrolled as a member of the Institute of Cost Accountants of India, or
- An advocate enrolled with a Bar Council.
Registration for a Limited Period
For a limited period, an eligible person can be appointed as an insolvency professional if he/she has been in practice for 15 years as:
- A Chartered Accountant enrolled as a member of the Institute of Chartered Accountants of India.
- A Company Secretary enrolled as a member of the Institute of Company Secretaries of India.
- Cost Accountant enrolled as a member of the Institute of Cost Accountants of India, or
- An advocate enrolled with a Bar Council.
Registration as Insolvency Professional
For a limited time, any person who is a qualified Chartered Accountant, Company Secretary, Cost Accountant or Advocate with over 15 years of practice can become an Insolvency Professional without taking the Insolvency Examination. To be registered, eligible Professionals can submit an application with a non-refundable application fee of Rs.5000.
Individuals appointed under this scheme would be registered for a limited period and cannot take any assignment as an insolvency professional after the expiry of Insolvency Professional registration.
