IBBI notifies amendments to insolvency code; applicable from Apr 1
The Insolvency and Bankruptcy Board of India (IBBI) on Wednesday notified the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2018 (Amendment Regulations), effective April 1.
According to the amendment regulations, subject to meeting other requirements, an individual shall be eligible for registration as an insolvency professional if he has passed the Limited Insolvency Examination within the last 12 months and has completed a pre-registration educational course from an insolvency professional agency, as may be required by the IBBI. Furthermore, the syllabus, format, qualifying marks and frequency of the aforementioned examination shall be published on the website of the IBBI at least three months before the examination.
As per the amendments, an individual with the required experience of 10/15 years is eligible for registration as an insolvency professional. In addition, an individual with little or no experience shall be eligible for registration as an insolvency professional on successfully completing the Graduate Insolvency Programme, as may be approved by the IBBI.
As a condition of registration, an insolvency professional shall undergo continuing professional education as may be required by the IBBI, and shall not outsource any of his duties and responsibilities under the Code.
As per the IBBI, a company, registered partnership firm or limited liability partnership shall be eligible for recognition as an insolvency professional entity, under certain conditions, as given below:
-its sole objective is to provide support services to insolvency professionals, who are its partners or directors, as the case may be;
-it has a net worth of not less than one crore rupees;
-majority of its shares is held by insolvency professionals, who are its directors, in case it is a company;
-majority of the capital contribution is made by insolvency professionals, who are its partners, in case it is a limited liability partnership firm or a registered partnership firm;
-majority of its partners or directors, as the case may be, are insolvency professionals;
-majority of its whole-time directors are insolvency professionals, in case it is a company; and
-none of its partners or directors is a partner or a director of another insolvency professional entity.
The Board also noted that an insolvency professional shall disclose the fee payable to him, to the insolvency professional entity, and to professionals engaged by him to the insolvency professional agency of which he is a professional member and the agency shall publish such disclosure on its website.
On a related note, amendments were made based on comments from the public, including the stakeholders and the regulated, on the regulations already notified under the insolvency code, and on a discussion paper on strengthening the Limited Insolvency Examination.