The Insolvency and Bankruptcy Board of India (IBBI) has notified a new set of regulations to amend the existing IBBI (Insolvency Professionals) Regulations, 2016 which shall come into force as on the date of its publication in the Official Gazette.
Substitution- Regulation 5(c)(iii)(Qualification & experience for registration of Insolvency Professionals):(iii) experience of -(a) ten years in the field of law, after receiving a Bachelor’s degree in law;(b) ten years in management, after receiving a Master’s degree in Management or two-year full time Post Graduate Diploma in Management; or(c) fifteen years in management, after receiving a Bachelor’s degree, from a university established or recognised by law or an Institute approved by All India Council of Technical Education; or”
Before the advent of this amendment, there was only one qualification prescribed under this sub-clause i.e., “fifteen years of experience in management, after receiving a Bachelor’s degree”. Now the ambit is increased to include law graduates and people experienced in management holding Master’s Degree or PG Diploma in Management. Further, institutes which are approved by All India Council of Technical Education are also covered under this sub-clause, post amendment.
Insertion- After Regulation 5(c)(iv):Explanation 1- For the purposes of this regulation, only professional and managerial experience shall be considered.Explanation 2.- For the purpose of computing-(a) the total experience of 10 or 15 years under sub-clause (iii), there shall be included experience of any period under sub-clause (iv);(b) the total experience of 10 years under sub-clause (iv), there shall be included experience of any period under any of the items of that sub-clause.Illustration 1Where an individual has experience of nine years under sub-clause (iii) and experience of six years under sub-clause (iv), he shall be considered having experience of fifteen years for the purposes of sub-clause (iii).Illustration 2Where an individual has experience of six years under item (a) of sub-clause (iv) and experience of four years under item (d) of sub-clause (iv), he shall be considered as havingtotal experience of ten years for the purposes of sub-clause (iv).
Clubbing of experience1. Experience of an individual under sub-clause (iii) & (iv) shall be clubbed together for the purpose of calculating total experience under sub-clause (iii).2. Experience of an individual under sub-clause (iv) shall be clubbed together for the purpose of calculating total experience under sub-clause (iv).
Omission- Regulation 9(Registration for a limited period)
Substitution- Regulation 12(1)(c)(Recognition of Insolvency Professional Entities): for the words “its shares”, the words “its equity shares” shall be substituted.
By this amendment it is clarified that, the majority of shares to be held by insolvency professionals should be only equity shares and not preference shares.
Substitution- Regulation 12(1)(c) proviso(Recognition of Insolvency Professional Entities):Provided that the insolvency professional entities recognised before the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Second Amendment) Regulations, 2021 shall comply with the provisions of clauses (b) and (c) on or before 31st December 2021. Explanation- For the purposes of clause (b) of this sub-regulation, “net worth” means-(i) the net worth as defined under section 2(57) of the Companies Act, 2013 in case of a company;(ii) sum of partners’ contribution in the capital account and their undistributed profits net of accumulated losses, if any, in case of a registered partnership firm orlimited liability partnership.
The entities are required to comply with clauses (b) & (c), on or before 31st December, 2021.(b) it has a net worth of not less than ?1 crore.(c) majority of its equity shares is held by insolvency professionals, who are its directors, in case it is a company.
Insertion- After Regulation 12(2):(3) The Board shall acknowledge an application made under this regulation within seven days of its receipt. (4) The Board may, after examination of the application-(i) require the applicant to submit, within reasonable time, additional documents, information or clarification;(ii) inspect or inquire the applicant;(iii) require any of the directors or partners of the applicant to appear, within a reasonable time, before it in person for any clarifications, as may be necessary for the purpose of considering the application.
Substitution- Regulation 13(1)(Recognition of Insolvency Professional Entities):(1)(a) Where the Board, after consideration of the application under sub-regulation (4) of regulation 12-(i) is satisfied that the applicant is eligible under these Regulations, it may grant a certificate of recognition as an insolvency professional entity within sixty days of receipt of the application, excluding the time taken by the applicant for submitting additional documents, information or clarification, or appearing in person, as the case may be, under sub-regulation (4) of regulation 12;(ii) is of the prima facie opinion that the recognition ought not be granted, it shall communicate such opinion along with reasons thereof and provide the applicant an opportunity to submit its explanation within fifteen days of the receipt of the communication from the Board, to enable it to form a final opinion.(b) The Board shall, within thirty days of receipt of the explanation, if any, submitted by the applicant under clause (a)-(i) grant a certificate of recognition as an insolvency professional entity; or(ii) reject the application by an order, after recording reasons thereof. (c) The Board shall grant a certificate of recognition as an insolvency professional entity under clause (a) or (b) in Form D of the Second Schedule.
Earlier, the procedural part and timeline of granting the certificate was not provided, but with the advent of this amendment, a much-clarified procedure is prescribed.
Substitution- Regulation 13(2)(b) & (c)(Recognition of Insolvency Professional Entities):for the word “seven”, the word “thirty” shall be substituted.
Earlier, the entities were required to inform the IBBI, admission and cessation of Directors/ Partners within 7 days, but with the advent of this amendment, the timeline is revised to 30 days.
Insertion- In first Schedule after clause (22):Clarification: An insolvency professional may, at any point of time, not have more than ten assignments as resolution professional in corporate insolvency resolution process, of which not more than three shall have admitted claims exceeding one thousand crore rupees each.
The Board has clarified and restricted the limit of assignments that a particular IP shall have at a particular point of time i.e., maximum 10 assignments as resolution professional in CIRP, out of which maximum 3 assignments can have admitted claims of more than ?1000 crore each.
The entire contents of this article are solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation by the Author. Compliance Calendar LLP and the Author of this Article do not constitute any sort of professional advice or a formal recommendation. The author has undertaken utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify and confirm the updates from the genuine sources before acting on any of the information’s provided hereinabove. Compliance Calendar LLP shall not be responsible for any loss or damage in any circumstances whatsoever.