INSOLVENCY AND BANKRUPTCY BOARD OF INDIA

NOTIFICATION

New Delhi, the 4th July, 2022

Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2022

No. IBBI/2022-23/GN/REG088.—In exercise of the powers conferred by sections 196, 207and 208 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Insolvency and Bankruptcy Board of India hereby makes the following regulations further to amend the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, namely:—

1. (1) These regulations may be called the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2022.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (hereinafter referred to as ‘the principal regulations’), for regulation 11, the following shall be substituted, namely:—

“Disciplinary Proceedings.

11. The disciplinary proceedings shall be conducted in accordance with the provisions of Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017.”

3. In the principal regulations, in the First Schedule,

(i) after clause 8A, the following clauses shall be inserted, namely:—

“8B. An insolvency professional shall disclose his relationship, if any, with the corporate debtor, other professionals engaged by him, financial creditors, interim finance providers, and prospective resolution applicants to the insolvency professional agency of which he is a member, within the time specified hereunder:

Relationship of the insolvency professional with Disclosure to be made within three days of
(1) (2)
Corporate debtor his appointment.
Registered valuers / accountants/ legal professionals/ other professionals appointed by him appointment of the professionals.
Financial creditors the constitution of committee of creditors.
Interim finance providers the agreement with the interim finance provider.
Prospective resolution applicants the supply of information memorandum to the prospective resolution applicant.
If relationship with any of the above, comes to notice or arises subsequently of such notice or arising.

8C. An insolvency professional shall ensure disclosure of the relationship, if any, of the other professionals engaged by him with himself, the corporate debtor, the financial creditor, the interim finance provider, if any, and the prospective resolution applicant, to the insolvency professional agency of which he is a member, within the time specified as under:

Relationship of the other professional with Disclosure to be made within three days of
(1) (2)
Insolvency professional the appointment of the other professional.
Corporate debtor the appointment of the other professional.
Financial creditors constitution of committee of creditors.
Interim finance providers the agreement with the interim finance provider or three  days    of the appointment  of the other
professional, whichever is later.
Prospective resolution applicants the supply of information memorandum to the prospective resolution applicant or three days of the appointment of the other professional, whichever is later.
If relationship with any of the above, comes to notice or arises subsequently of such notice or arising.

Explanation: For the purposes of clause 8B and 8C above, ‘relationship’ shall mean any one or more of the following four kinds of relationships at any time or during the three years preceding the appointment of other professionals:

Kind of
relationship
Nature of relationship
(1) (2)
A Where the insolvency professional or the other professional, as the case may be, has derived 5% or more of his / its gross revenue in a year from professional services to the related party.
B Where the insolvency professional or the other professional, as the case may be, is a shareholder, director, key managerial personnel or partner of the related party.
C Where a relative (spouse, parents, parents of spouse, sibling of self and spouse, and children) of the insolvency professional or the other professional, as the case may be, has a relationship of kind A or B with the related party.
D Where the insolvency professional or the other professional, as the case may be, is a partner or director of a company, firm or LLP, such as, an insolvency professional entity or registered valuer, the relationship of kind A, B or C of every partner or director of such company, firm or LLP with the related party.

8D. An insolvency professional shall ensure timely and correct disclosures by him, and other professionals appointed by him and shall provide a confirmation to the insolvency professional agency of which he is a professional member to the effect that the appointment, if any, of every other professional has been made at arms’ length relationship.”

(ii) after clause 15, the following clause shall be inserted, namely:—

“15A. An insolvency professional shall prominently state in all his communications to a stakeholder, his name, address, e-mail, registration number and validity of authorisation for assignment, if any, issued by the insolvency professional agency of which he is a member.”

(iii) after clause 25A, the following clauses shall be inserted, namely:—

“25B. An insolvency professional shall raise bills or invoices in his name towards his fees, and such fees shall be paid to him through banking channel.

25C. An insolvency professional shall ensure that the insolvency professional entity or the professional engaged by him raises bills or invoices in their own name towards their fees, and such fees shall be paid to them through banking channel.”

(iv) after clause 27, the following clauses shall be inserted, namely:—

“27A. An insolvency professional shall, while undertaking assignment or conducting processes, exercise reasonable care and diligence and take all necessary steps to ensure that the corporate person complies with the applicable laws.

27B. An insolvency professional shall not include any amount towards any loss, including penalty, if any, in the insolvency resolution process cost or liquidation cost, incurred on account of non-compliance of any provision of the laws applicable on the corporate person while conducting the insolvency resolution process, fast track insolvency resolution process, liquidation process or voluntary liquidation process, under the Code.”

RAVI MITAL, Chairperson

[ADVT.-III/4/Exty./159/2022-23]

Note: The Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 were published vide notification No. IBBI/2016-17/GN/REG003 dated 23rd November, 2016 in the Gazette of India, Extraordinary, Part III, Section 4, No. 424 on 23rd November, 2016 and were last amended by the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Second Amendment) Regulations, 2021 published vide notification No. IBBI/2021-22/GN/REG077 dated 22nd July, 2021 in the Gazette of India, Extraordinary, Part III, Section 4, No. 294 on 22nd July, 2021.

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