Insolvency and Bankruptcy Board of India Insolvency Professionals Regulations 2016. CAs, CMA, CS and advocates eligible for registration

Insolvency and Bankruptcy Board of India Insolvency Professionals Regulations 2016. CAs, CMA, CS and advocates eligible for registration

INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
NOTIFICATION

New Delhi, the 23rd November, 2016

Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016

No. IBBI/2016-17/GN/REG003.—In exercise of the powers conferred by sections 196, 207 and 208 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Board hereby makes the following Regulations, namely

CHAPTER I
GENERAL

Short title and commencement.
1. (1) These Regulations may be called the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016.
(2) These Regulations shall come into force on 29th November, 2016.

Definitions.
2. (1) In these Regulations, unless the context otherwise requires –

(a) “Bar Council” means a Bar Council constituted under the Advocates Act, 1961 (25 of 1961);
(b) “certificate of registration” means a certificate of registration granted by the Board under section 207 of the Code read with these Regulations;
(c) “Code” means the Insolvency and Bankruptcy Code, 2016 (31 of 2016);
(d) “Institute of Chartered Accountants of India” means the Institute constituted under the Chartered Accountants Act, 1949 (38 of 1949);
(e) “Institute of Cost Accountants of India” means the Institute constituted under the Cost and Works Accountants Act, 1959 (23 of 1959);
(f) “Institute of Company Secretaries of India” means the Institute constituted under the Institute of the Company Secretaries Act, 1980 (56 of 1980); and
(g) “professional member” means an individual who has been enrolled as a member of an insolvency professional agency

(2) Unless the context otherwise requires, words and expressions used and not defined in these Regulations, shall have the meanings assigned to them in the Code.

CHAPTER II
INSOLVENCY EXAMINATIONS

3. (1) The Board shall, either on its own or through a designated agency, conduct a ‘National Insolvency Examination’ in such a manner and at such frequency, as may be specified, to test the knowledge and practical skills of individuals in the areas of insolvency, bankruptcy and allied subjects.
(2) The Board shall, either on its own or through a designated agency, conduct a ‘Limited Insolvency Examination’ to test the knowledge and application of knowledge of individuals in the areas of insolvency, bankruptcy and allied subjects.
(3) The syllabus, format and frequency of the ‘Limited Insolvency Examination’, including qualifying marks, shall be published on the website of the Board at least one month before the examination.

CHAPTER III
REGISTRATION OF INSOLVENCY PROFESSIONALS

Eligibility.
4. No individual shall be eligible to be registered as an insolvency professional if he-
(a) is a minor;
(b) is not a person resident in India;
(c) does not have the qualification and experience specified in Regulation 5 or Regulation 9, as the case may be;
(d) has 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: Provided that if a person has been convicted of any offence and sentenced in respect thereof to imprisonment for a period of seven years or more, he shall not be eligible to be registered;
(e) he is an undischarged insolvent, or has applied to be adjudicated as an insolvent;
(f) he has been declared to be of unsound mind; or
(g) he is not a fit and proper person;
Explanation: For determining whether an individual is fit and proper under these Regulations, the Board may take account of any consideration as it deems fit, including but not limited to the following criteria-
(i) integrity, reputation and character,
(ii) absence of convictions and restraint orders, and
(iii) competence, including financial solvency and net worth.

Qualifications and experience.
5. Subject to the other provisions of these Regulations, an individual shall be eligible for registration, if he-
(a) has passed the National Insolvency Examination;
(b) has passed the Limited Insolvency Examination, and has fifteen years of experience in management, after he received a Bachelor’s degree from a university established or recognized by law; or
(c) has passed the Limited Insolvency Examination and has ten years of experience as –
(i) a chartered accountant enrolled as a member of the Institute of Chartered Accountants of India,
(ii) a company secretary enrolled as a member of the Institute of Company Secretaries of India,
(iii) a cost accountant enrolled as a member of the Institute of Cost Accountants of India, or
(iv) an advocate enrolled with a Bar Council.

Application for certificate of registration.
6. (1) An individual enrolled with an insolvency professional agency as a professional member may make an application to the Board in Form A of the Second Schedule to these Regulations, along with a non-refundable application fee of ten thousand rupees to the Board.
(2) The Board shall acknowledge an application made under this Regulation within seven days of its receipt.
(3) The Board may require the applicant to submit, within reasonable time, additional documents, information or clarification that it deems fit.
(4) The Board may require the applicant to appear, within reasonable time, before the Board in person, or through his authorised representative for clarifications required for processing the application.

Certificate of registration.
7. (1) If the Board is satisfied, after such inspection or inquiry as it deems necessary that the applicant is eligible under these Regulations, it may grant a certificate of registration to the applicant to carry on the activities of an insolvency professional in Form B of the Second Schedule to these Regulations, within sixty days of receipt of the application, excluding the time given by the Board for presenting additional documents, information or clarification, or appearing in person, as the case may be.
(2) The registration shall be subject to the conditions that the insolvency professional shall –
(a) at all times abide by the Code, rules, regulations, and guidelines thereunder and the bye-laws of the insolvency professional agency with which he is enrolled;
(b) at all times continue to satisfy the requirements under Regulation 4;
(c) pay a fee of ten thousand rupees to the Board, every five years after the year in which the certificate is granted;
(d) not render services as an insolvency professional unless he becomes a partner or director of an insolvency professional entity recognised by the Board under Regulation 13, if he is not a citizen of India;
(e) take prior permission of the Board for shifting his professional membership from one insolvency professional agency to another, after receiving no objection from both the concerned insolvency professional agencies;
(f) take adequate steps for redressal of grievances;
(g) maintain records of all assignments undertaken by him under the Code for at least three years from the completion of such assignment;
(h) abide by the Code of Conduct specified in the First Schedule to these Regulations; and
(i) abide by such other conditions as may be imposed by the Board.

Refusal to grant certificate.
8. (1) If, after considering an application made under Regulation 6, the Board is of the prima facie opinion that the registration ought not be granted, it shall communicate the reasons for forming such an opinion and give the applicant an opportunity to explain why his application should be accepted, within fifteen days of the receipt of the communication from the Board, to enable it to form a final opinion.
(2) The communication under sub-regulation (1) shall be made to the applicant within forty five days of receipt of the application, excluding the time given by the Board for presenting additional documents, information or clarifications, or appearing in person, as the case may be.
(3) After considering the explanation, if any, given by the applicant under sub-regulation (1), the Board shall communicate its decision to-
(a) accept the application, along with the certificate of registration, or
(b) reject the application by an order, giving reasons thereof, within thirty days of receipt of the explanation.

Registration for a limited period.
9. (1) Notwithstanding any of the provisions of Regulation 5, an individual shall be eligible to be registered for a limited period as an insolvency professional if he-
(a) has been ‘in practice’ for fifteen years as-
(i) a chartered accountant enrolled as a member of the Institute of Chartered Accountants of India,
(ii) a company secretary enrolled as a member of the Institute of Company Secretaries of India,
(iii) a cost accountant enrolled as a member of the Institute of Cost Accountants of India, or
(iv) an advocate enrolled with a Bar Council; and

(b) submits an application for registration in Form A of the Second Schedule to these Regulations to the insolvency professional agency with which he is enrolled on or before 31st December, 2016 along with a non-refundable application fee of five thousand rupees which shall be collected by such insolvency professional agency on behalf of the Board.

(2) The insolvency professional agency shall submit to the Board the fee collected and the details of the applications received under sub-regulation (1)(b).
(3) An individual referred to sub-regulation (1) shall be registered for a limited period upon submission of the details and fee to the Board under sub-regulation (2), which shall be valid for a period of six months from the date of such submission.
(4) An insolvency professional registered under sub-regulation (3) shall not undertake any assignment as an insolvency professional after the expiry of his registration: Provided that he may complete the pending assignments undertaken before the expiry of his registration, and his registration shall be deemed to be valid for this limited purpose.

CHAPTER IV
TEMPORARY SURRENDER AND DISCIPLINARY PROCEEDINGS

Temporary surrender.
10. (1) An insolvency professional agency shall inform the Board if any of its professional members has temporarily surrendered his certificate of membership or revived his certificate of membership after temporary surrender, not later than seven days from approval of the application for temporary surrender or revival, as the case may be.
(2) The Board shall take note of the information received under sub-regulation (1).

Disciplinary proceedings.
11. (1) Based on the findings of an inspection or investigation, or on material otherwise available on record, if the Board is of the prima facie opinion that sufficient cause exists to take actions permissible under section 220, it shall issue a show-cause notice to the insolvency professional.
(2) The show-cause notice shall be in writing, and shall state-
(a) the provisions of the Code under which it has been issued;
(b) the details of the alleged facts;
(c) the details of the evidence in support of the alleged facts;
(d) the provisions of the Code, rules, regulations and guidelines thereunder allegedly violated, or the manner in which the public interest is allegedly affected;
(e) the actions or directions that the Board proposes to take or issue if the allegations are established;
(f) the manner in which the insolvency professional is required to respond to the show-cause notice;
(g) consequences of failure to respond to the show-cause notice; and
(h) procedure to be followed for disposal of the show-cause notice.

(3) The show-cause notice shall enclose copies of documents relied upon and extracts of relevant portions from the report of investigation or inspection, or other records.
(4) A show-cause notice issued shall be served on the insolvency professional in the following manner-
(a) by sending it to the insolvency professional, at the address provided by him or provided by the insolvency professional agency with which he is enrolled , by registered post with acknowledgement due; or
(b) by an appropriate electronic means to the email address of the insolvency professional, provided by him or provided by the insolvency professional agency with which he is enrolled.

(5) The Board shall constitute a Disciplinary Committee for disposal of the show-cause notice.
(6) The Disciplinary Committee shall endeavour to dispose of the show-cause notice within a period of six months of the assignment.
(7) The Disciplinary Committee shall dispose of the show-cause notice assigned under sub-regulation (5) by a reasoned order in adherence to principles of natural justice, and after considering the submissions, if any, made by the insolvency professional, the relevant material facts and circumstances, and the material on record.
(8) The order disposing of a show-cause notice may provide for-
(a) no action; (b) warning; (c) any of the actions under section 220(2) to (4); or (d) a reference to the Board to take any action under section 220(5).
(9) The order passed under sub-regulation (7) shall not become effective until thirty days have elapsed from the date of issue of the order unless the Disciplinary Committee states otherwise in the order along with the reason for the same.
(10) The order passed under sub-regulation (7) shall be issued to the insolvency professional, with a copy issued to the insolvency professional agency with which he is enrolled immediately, and be published on the website of the Board

CHAPTER V
RECOGNITION OF INSOLVENCY PROFESSIONAL ENTITIES

Recognition of Insolvency Professional Entities.
12. (1) A limited liability partnership, a registered partnership firm or a company may be recognised as an insolvency professional entity if-
(a) a majority of the partners of the limited liability partnership or registered partnership firm are registered as insolvency professionals; or
(b) a majority of the whole-time directors of the company are registered as insolvency professionals, as the case may be.

(2) A person eligible under sub-regulation (1) may make an application for recognition as an insolvency professional entity to the Board in Form C of the Second Schedule to these Regulations.

13. (1) If the Board is satisfied, after such inspection or inquiry as it deems necessary that the applicant is eligible under these Regulations, it may grant a certificate of recognition as an insolvency professional entity in Form D of the Second Schedule to these Regulations.
(2) The recognition shall be subject to the conditions that the insolvency professional entity shall- (a) at all times continue to satisfy the requirements under Regulation 12; (b) inform the Board, within seven days, when an insolvency professional ceases to be its director or partner, as the case may be, (c) inform the Board, within seven days, when an insolvency professional joins as its director or partner, as the case may be, and (d) abide by such other conditions as may be specified.
(3) An insolvency professional entity shall be jointly and severally liable for all acts or omissions of its partners or directors as insolvency professionals committed during such partnership or directorship.

14. Where the Board is of the opinion that sufficient cause exists for de-recognition of an insolvency professional entity,

FIRST SCHEDULE
[Under Regulation 7(2)(g)]
CODE OF CONDUCT FOR INSOLVENCY PROFESSIONALS

Code of Conduct for Insolvency Professionals Click Here >>

SECOND SCHEDULE
FORM A
[Under Regulation 6 or Regulation 9 of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016]

Download Format of application for registration Click Here >>

Download Notification Click Here >>