Notifications concerning Model Bye-Laws and Governing Board of Insolvency Professional Agencies (Amendment) Regulations

On the day of 14th January 2021, the Insolvency and Bankruptcy Board of India had stated the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2021 towards revising the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016. 

The amendments are:

• Regulation 5 (4A), which stipulates the qualification of a shareholder director, was introduced, namely: Shareholder director is an individual, who is required to fulfill the eligibility standards, which includes knowledge and qualification, as stated by the Governing Board.

• Regulation 5 (14), which states the disclosure of the authority, was introduced, namely:

A director would disclose any order of any authority that affects his character or status, towards the insolvency professional agency, within a week of issue of such order: Provided that a copy of the order must be placed immediately on the website of the insolvency professional agency. Furthermore, such director would instantly stop to be a director of the insolvency professional agency where the order excludes him to be a director of a firm.”

• Regulation 6, which states self-evaluation, was introduced, namely:

The Governing Board would evaluate its performance in a fiscal year within 3 months of the closure of the year, in the manner as decided by it. The insolvency professional agency would publish a report on self-evaluation mentioned in sub-regulation (1) on its website.

• Regulation 7, which states the compliance officer responsibilities, was introduced, namely:

An insolvency professional agency would elect or employ a compliance individual who will be responsible for safeguarding compliance with the conditions of the Code as well as regulations, circulars, guidelines, and directions issued under it. The compliance officer would, immediately and independently, report to the Board any non-compliance with the provisions mentioned in sub-regulation (1). The compliance officer will submit a compliance certificate to the Board annually, confirming that the insolvency professional agency had fulfilled the provisions stated in sub-regulation (1). The Governing Board would engage or remove the compliance officer only through a resolution passed in its meeting.

Conclusion

The Governing Board of the Insolvency and Bankruptcy Board of India had decided on 28th March 2020 in order to amend the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016. The notification relating to the amendment of the regulations could not be published in the Gazette of India, because of the nationwide lockdown stated by the Central Government on 25th March 2020, following the occurrence of Covid-19. The amendment regulations, therefore, have been published on the website of the Board for it to be effective from the 28th March 2020, with a note that the same would be issued in the Gazette of India once the Government Press accepts the notification for publication. The meaning of the Governing Board has been to bring into force the revised regulations with effect from the 28th March 2020.

Further, it was been certified that since the amendment regulations simplify insolvency professionals in order to get authorization for assignment to practice as such, no individual is being unfavorably affected by giving retrospective effect.

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Author:

eStartIndia Team