Amendment to the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016
The Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 (Model Bye laws Regulations) lay down the governance structure and provides for model bye laws of the Insolvency Professional Agencies (IPA).
2. The Board had issued three circulars, namely, (i) circular No. IP/005/2018 dated January 16, 2018 specifying the format for disclosure of relationship by the insolvency professional (IP) (ii) circular no. IPA/009/2018 dated April 19, 2018 mandating IPAs to submit Annual Compliance Certificate in the format given in the circular and (iii) circular No. IBBI/IPA/43/2021 dated July 28, 2021 specifying the list of contraventions by IP and the amount of penalty to be imposed by IPAs.
3. The Board has notified Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Second Amendment) Regulations, 2022 on November 01, 2022, vide which provisions of aforesaid circulars have been incorporated in the Model Bye Laws Regulations and the said circulars stand rescinded. By the said amendment, no change in the list of contraventions by the IP and the amount of monetary penalties, has been introduced, as contained in the circular no. IBBI/IPA/43/2021, dated July 28, 2021.
INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
NOTIFICATION
New Delhi, the 31st October, 2022
Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Second Amendment) Regulations, 2022
No. IBBI/2022-23/GN/REG101.—In exercise of the powers conferred by sections 196, 203 and 205 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 (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016, namely:-
1. (1) These regulations may be called the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Second 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 (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 (hereinafter referred to as ‘the principal regulations’), sub-regulation (3) in regulation 7, shall be substituted by following, namely:-
“(3) The compliance officer shall submit to the Board, a compliance certificate annually in the format issued by the Board, verifying that the insolvency professional agency has complied with the provisions referred to in sub-regulation (1):
Provided that the annual compliance certificate shall also be signed by the managing director of the insolvency professional agency.”
3. In the principal regulations, in the Schedule-
(i) in clause 6, after sub-clause (2), the following sub-clause shall be inserted, namely:-
“(3) The Agency shall-
(a) facilitate receipt of relationship disclosures from its professional members in accordance with the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016;
(b) disseminate the disclosures on its website in the following format, within three working days of the receipt of the disclosures from its professional member:
DISCLOSURE OF RELATIONSHIP BY AN INSOLVENCY PROFESSIONAL
Disclosures by the insolvency professionals and other professionals appointed by the insolvency professionals conducting resolution processes of…….. (name of the corporate debtor)
Insolvency
|
Name of profe-ssional |
Professional
|
Permanent account number (PAN) |
Relationship with |
|||||
Interim resolution professional / resolution professional |
Other
|
Corporate debtor |
Name of financial creditor (s) |
Interim
|
Name of pros-pective resolution appli-cant(s) |
||||
Interim resolution professional / resolution professional |
NA |
||||||||
Registered valuer |
NA |
||||||||
Accountant |
NA |
A |
|||||||
Advocate |
NA |
||||||||
Any other professional (write kind of profession) |
NA |
||||||||
Notes:
(i) NA: Not Applicable.
(ii) Additional rows and columns to be inserted, as required, where there are more than one professional, financial creditor, interim finance provider or prospective resolution applicant.
(iii) Where an accountant has relationship of kind A with a financial creditor, relevant cell will display ‘A’, as indicated in the above table. One may click on ‘A’ to find details of relationship.
(c) ensure receipt of confirmation from its professional member to the effect that the appointment of every other professional has been made at arm’s length relationship.”
(ii) after clause 23A, the following explanation shall be inserted, namely:-
“Explanation.- A disciplinary proceeding shall be considered as pending against the professional member from the date he has been issued a show cause notice by the Agency or the Board, as the case may be, till its disposal by the Disciplinary Committee of the Agency or the Board, as the case may be.”
(iii) in clause 24, in sub-clause (2), for item (d), the following shall be substituted, namely:-
“(d) imposition of monetary penalty as per Table below:
| Sl. No. | Contravention | Monetary Penalty |
| 1. | Fails to submit disclosures, returns, etc. to Agency or submits inadequate or incorrect disclosures, returns, etc., relating to any assignment, as required under the Code and Regulations made thereunder or bye-laws of the Agency or called upon by the Board or the Agency. | Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000. |
| 2. | Accepts an assignment having conflict of interests with the stakeholders. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 3. | Fails to maintain records properly relating to any of his assignments. | Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000. |
| 4. | Rejects a claim(s) without giving any proper reason while undertaking an assignment or fails to exercise due diligence in claim verification. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 5. | Fails to comply with directions issued by Adjudicating Authority or the Appellate Authority. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 6. | Outsources his duties and obligations. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 7. | Fails to appoint registered valuers, wherever required, under the Code or Regulations made thereunder, for conducting valuation. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 8. | Fails to supply the information called for or to comply with the requirements of information sought by the Agency, Board, Adjudicating Authority or the Appellate Authority or does not cooperate with the inspection or investigating authority. | Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000. |
| 9. | Fails to make public announcement in the manner provided for in the relevant Regulations. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 10. | Fails to provide notice regarding meetings of creditors. | Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000. |
| 11. | Fails to reject resolution plan from ineligible resolution applicants. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 12. | Fails to take action in respect of preferential, undervalued, fraudulent or extortionate credit transactions. |
Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| 13. | Enters into contract or agreement with professionals in an incomplete and improper manner. | Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000. |
| 14. | Contravenes any provision of the bye-laws, or regulations for which no specific penalty has been provided. | Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000. |
RAVI MITAL, Chairperson
[ADVT.-III/4/Exty./361/2022-23]
Note: The Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 were published vide notification No. IBBI/2016-17/GN/REG001 dated 21st November, 2016 in the Gazette of India, Extraordinary, Part III, Section 4, No. 421 on 22nd November, 2016 and were last amended by the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2022 published vide notification No. IBBI/2022-23/GN/REG100 in the Gazette of India, Extraordinary, Part III, Section 4, No. 483 on dated 3rd October, 2022.
