Insolvency And Bankruptcy Board Of India

Since its constitution, the Insolvency and Bankruptcy Board has issued draft rules on the regulation of insolvency professionals (IPs) and insolvency professional agencies (IPAs) to handle bankruptcy issues in India. In this article, we look at the Insolvency And Bankruptcy Board Of India and the Insolvency and Bankruptcy Code of India 2016 in detail.

Insolvency and Bankruptcy Rules & Regulations

The Insolvency And Bankruptcy Board Of India (IBBI), in the exercise of its powers as ensured under section 240 of the Insolvency and Bankruptcy Code, 2016, has notified the subsequent two regulations:

The Insolvency And Bankruptcy Board Of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016, and
The Insolvency And Bankruptcy Board Of India (Insolvency Professional Agencies) Regulations, 2016.

These two regulations inter alia enable for the eligibility norms to be a Professional Member of an Insolvency Professional Agency and also for eligibility norms to be subject to registration with the IBBI as an Insolvency Professional Agency.

Criteria for Becoming an Insolvency Professional Agency (IPA)

A company registered under Section 8 of the Companies Act, 2013 with a least amount net worth of Rs. 10 crores will be eligible to be an Insolvency Professional Agency. Greater than half of the Directors of its Board must be independent directors and not more than one-fourth of the Directors should be insolvency professionals. The Insolvency Professional Agency must have Membership Committee(s), Monitoring Committee, Grievance Redressal Committee(s), and Disciplinary Committee(s) for regulation and oversight of professional members. Also, a Limited Liability Partnership (LLP), a registered partnership firm or a company can be recognized as a professional insolvency entity. For an LLP or Partnership Firm or Company under the professional insolvency entity, the partners of the LLP or registered partnership firm or a preponderance of the whole-time directors of the company will register as insolvency professionals under the Code. The IPA Regulations lay down the process and eligibility for registration as an IPA and grounds for rejection, suspension and cancellation of registration. The following is the stand of the IPA regulations on shareholding of an IPA. Only 49% of the share capital of an IPA can be in custody, either directly or indirectly, by a person inhabitant outside India. Additionally, previous approval of the Board requires when a person other than a constitutional body seeks to hold greater than 10% in the share capital of an IPA, either directly or indirectly. Every IPA applicant, together with its directors, promoters and all persons holding more than 10% of its share capital, is necessary to be a 'fit and proper' person as ensured by the Board based on the guidelines in the Code and the IPA Regulations. In-principle registrations (i.e., temporary registrations) are also accessible to IPs for a limited period of 1 year. The in-principle approval administration replaces the provisional and transitional registration regime anticipated in the draft IPA regulations.

Eligibility for Becoming an Insolvency Professionals

The following categories of individuals can be qualified for registration as an insolvency professional:

Advocates, Chartered Accountants, Company Secretaries and Cost Accountants are having ten years of post-membership experience (practice or employment) or a Graduate with fifteen years' of post-qualification managerial experience, on the passing of the Limited Insolvency Examination.
Any other individual on the passing the National Insolvency Examination.

Advocates, Chartered Accountants, Company Secretaries and Cost Accountants with greater than 15 years of practice experience may apply for registration, without any examination. However, applications for such registration is before 31st December 2016, and such registration will be applicable for a limited period of six months.

National Insolvency Examination

There will be a 'National Insolvency Examination' for qualifying Insolvency Professionals. The particulars of National Insolvency Examination, course outline, format and frequency of the examination will be published on the website of the Board at least 1 month before the examination.

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Frequently Asked Questions

Common questions about Insolvency and Bankruptcy Board of India Regulations.

The Insolvency and Bankruptcy Board of India (IBBI) is a regulatory body established under the Insolvency and Bankruptcy Code, 2016. It is responsible for overseeing the insolvency resolution process in India, including regulating insolvency professionals and insolvency professional agencies.

The article mentions two key regulations issued by the IBBI: 1) The Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016, and 2) The Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016. These regulations govern the eligibility criteria and operations of insolvency professional agencies and insolvency professionals.

To become an IPA, a company must be registered under Section 8 of the Companies Act, 2013, with a minimum net worth of Rs. 10 crores. Additionally, more than half of its board of directors must be independent, and no more than one-fourth can be insolvency professionals. The IPA must also have various committees for regulating and overseeing its professional members.

Yes, but with certain restrictions. Only 49% of an IPA's share capital can be held, directly or indirectly, by a person residing outside India. Furthermore, any person other than a statutory body seeking to hold more than 10% of an IPA's share capital requires prior approval from the IBBI.

Advocates, Chartered Accountants, Company Secretaries, and Cost Accountants with at least 10 years of post-membership experience, or a graduate with 15 years of post-qualification managerial experience, can become insolvency professionals by passing the Limited Insolvency Examination. Alternatively, any individual can become an insolvency professional by passing the National Insolvency Examination.

Yes, Advocates, Chartered Accountants, Company Secretaries, and Cost Accountants with more than 15 years of practice experience can apply for registration as insolvency professionals without any examination, but only before December 31, 2016. Such registration is valid for a limited period of six months.

The National Insolvency Examination is a qualifying examination for individuals seeking to become insolvency professionals. The IBBI will publish the details of the examination, including the course outline, format, and frequency, on its website at least one month before the examination.

The Insolvency Professional Agency must have a Membership Committee(s) responsible for regulating and overseeing the professional members of the agency. The Membership Committee likely determines the eligibility criteria for membership and ensures that members adhere to the agency's rules and regulations.

Yes, the article mentions that LLPs, registered partnership firms, or companies can be recognized as professional insolvency entities. For an LLP or partnership firm, the partners must register as insolvency professionals under the Insolvency and Bankruptcy Code.

The Insolvency Professional Agency must have a Grievance Redressal Committee(s) to address and resolve any grievances or complaints raised against its professional members. This committee likely plays a crucial role in maintaining the integrity and professionalism of the agency and its members.