The Insolvency and Bankruptcy Board of India (IBBI) has issued the “Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment) Regulations, 2024,” exercising powers conferred by the Insolvency and Bankruptcy Code, 2016. The amendments aim to refine and enhance the voluntary liquidation process, introducing changes to various aspects of the existing regulations.
Key Amendments:
1. Affidavit Verification: In Regulation 3(1)(a), sub-regulation (i) has been amended to remove the word “and” after the words “the liquidation;”. Additionally, a new sub-clause (iii) has been added, requiring the corporate person to make sufficient provision for obligations arising from pending matters mentioned in sub-clause (iii) of clause (b). This emphasizes the need for adequate provisions to meet pending obligations during the voluntary liquidation process.
2. Disclosure Requirements: Regulation 3(1)(b) has been amended to include sub-clause (iii), mandating disclosure about pending proceedings or assessments before statutory authorities and pending litigations concerning the corporate person. This ensures transparency and comprehensive reporting of legal matters that may impact the voluntary liquidation process.
3. Meeting of Contributories: In Regulation 37(2), there is a significant change in clause (a), requiring the liquidator to hold a meeting of contributories within fifteen days from the end of two hundred and seventy days or ninety days, as applicable. The amendment emphasizes periodic meetings at specified intervals until the submission of the application for dissolution. Moreover, the reasons for not completing the process within the stipulated time period and the additional time required must be provided.
4. Status Report Filing: A new sub-regulation (4) has been added to Regulation 37, requiring the liquidator to file a Status Report with the Board within seven days of the contributories’ meeting. This ensures timely reporting and updates to the regulatory authority regarding the progress and status of the voluntary liquidation process.
5. Withdrawal from Corporate Voluntary Liquidation Account: Regulation 39 has undergone substantial changes, introducing sub-regulations (7) to (7E). These amendments outline a structured process for stakeholders to claim entitlement to amounts deposited into the Corporate Voluntary Liquidation Account. The liquidator must verify claims, request the Board for release of amounts, and subsequently distribute them to stakeholders. The Board’s involvement is crucial in releasing funds, and stakeholders have avenues for seeking withdrawal even after the dissolution of the corporate person.
Conclusion:
The amendments introduced by the Insolvency and Bankruptcy Board of India aim to enhance the efficiency and transparency of the voluntary liquidation process. By addressing affidavit verification, disclosure requirements, meeting intervals, status reporting, and withdrawal processes, these amendments contribute to a more robust regulatory framework for corporate voluntary liquidation in India. Stakeholders and professionals involved in the insolvency and bankruptcy ecosystem need to be cognizant of these changes to ensure compliance and effective implementation.
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INSOLVENCY AND BANKRUPTCY BOARD OF INDIA NOTIFICATION
New Delhi, the 31st January, 2024
Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment) Regulations, 2024
No. IBBI/2023-24/GN/REG109.—In exercise of the powers conferred by clause (t) of sub-section (1) of section 196 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 (Voluntary Liquidation Process) Regulations, 2017, namely: –
1. (1) These Regulations may be called the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment) Regulations, 2024.
(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 (Voluntary Liquidation Process) Regulations, 2017 (hereinafter referred to as ‘the principal regulations’), in regulation 3, in sub-regulation (1) –
(I) in clause (a), after the phrase “as the case may be, verified by an affidavit stating that – ” –
(a) in sub-clause (i), the word “and”, after the words and mark “the liquidation;”, shall be omitted.
(b) in sub-clause (ii), after the words and mark “defraud any person;”, the word “and”, shall be inserted
(c) after sub-clause (ii), the following sub-clause shall be inserted, namely:-
“(iii) the corporate person has made sufficient provision to meet the obligations arising on account of pending matters mentioned in sub-clause (iii) of clause (b).”
(II) in clause (b),
(a) in sub-clause (ii), after the words and mark “by a registered valuer;”, the word “and”, shall be inserted.
(b) after sub-clause (ii), the following sub-clause shall be inserted, namely:-
“(iii) disclosure about pending proceedings or assessments before statutory authorities, and pending litigations, in respect of the corporate person.”
3. In the principal regulations, in regulation 8, in sub-regulation (1), in clause (b), the word “Annual” shall be
4. In the principal regulations, in regulation 37,
(I) in sub-regulation (2),
(a) for the words “twelve months”, the words “the period stipulated in sub-regulation (1)”, shall be
(b) for clause (a), the following clause shall be substituted, namely:-
“(a) hold a meeting of the contributories of the corporate person within fifteen days –
(i) from the end of two hundred and seventy days or ninety days, as the case may be, and
(ii) thereafter at the end of every succeeding two hundred and seventy days or ninety days, as the case may be,
as stipulated in sub-regulation (1), till submission of application for dissolution of the corporate person; and”
(c) in clause (b),
(i) the word “Annual” shall be omitted.
(ii) in sub-clause (iii), the word “and” shall be omitted.
(iii) in sub-clause (v), the word “and” shall be omitted.
(iv) in sub-clause (vi), the mark “.”, shall be substituted with the word and mark “; and”.
(v) after sub-clause (vi), the following sub-clause shall be inserted, namely:-
“(vii) the reasons for not completing the process within stipulated time period and the additional time required for completing the process.”
(II) in sub-regulation (3), the word “Annual” shall be omitted.
(III) after sub-regulation (3), the following sub-regulation shall be inserted, namely:-
“(4) The liquidator shall file the Status Report with the Board within seven days of the meeting of contributories.”
5. In the principal regulations, in regulation 39,
(I) for sub-regulation (7), the following sub-regulations shall be substituted, namely:-
“(7) Prior to dissolution of the corporate person, a stakeholder, who claims to be entitled to any amount deposited into the Corporate Voluntary Liquidation Account, may apply to the liquidator in Form-I for withdrawal of the amount.
(7A) On receipt of request under sub-regulation (7), the liquidator after verification of the claim, shall request the Board for release of amount to him for onward distribution.
(7B) The Board on receipt of request under sub-regulation (7A) may release the amount to the liquidator.
(7C) The liquidator shall, after making the distribution to the stakeholder shall intimate the Adjudicating Authority of such distribution.
(7D) After dissolution of the corporate person, a stakeholder, who claims to be entitled to any amount deposited into the Corporate Voluntary Liquidation Account, may apply to the Board in Form-I for an order for withdrawal of the amount.
(7E) If any other person other than the stakeholder claims to be entitled to any amount deposited to the Corporate Voluntary Liquidation Account, he shall submit evidence to satisfy the liquidator or the Board, as the case may be, that he is so entitled.”
(II) in sub-regulation (8), for the expression “sub-regulation (7)”, the expression “sub-regulation (7D)” shall be substituted.
RAVI MITAL, Chairperson
[ADVT.-III/4/Exty./727/2023-24]
Note: The Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 were published vide Notification No. IBBI/2016-17/GN/REG010 on 31st March, 2017 in the Gazette of India, Extraordinary, Part III, Section 4, No. 130 dated 31st March, 2017 and were last amended by the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Second Amendment) Regulations, 2022 published vide notification No. IBBI/2022-23/GN/REG095 dated 16th September 2022 in the Gazette of India, Extraordinary, Part III, Section 4, No. 457 on 16th September, 2022.
