On Monday evening, Insolvency and Bankruptcy Board of India (IBBI) issued a notification providing a framework for regulating “Insolvency Professional Agencies”.
It is another step to implement the Bankruptcy code and improve the ease of doing business in the country. Last month, the draft rules were notified and put out for public comments to take shareholders views into consideration till 31 October and the IBBI was scheduled to meet this month to finalize the draft rules. Chaired by M.S.Sahoo, the insolvency and bankruptcy board held meetings to finalize the draft rules under the code.
In May, the Insolvency and Bankruptcy Code, 2016 was passed to improve the ease of doing business in India. The code facilitates faster turnaround of businesses with time bound settlement of insolvency. The bankruptcy code deals with corporate solvency also covering individuals. companies, partnership firms, and LLPs. The duty of IPAs is to ensure compliance with the regulations issued under the Bankruptcy Code and promote insolvency professionals registered under the code.
Under the rules, a company with net worth of 10 crores and paid up share capital of 5 crores can register as an insolvency professional agency. These regulations make it necessary to have a minimum of seven Directors on IPA governing board. Also, the control of Insolvency Professional Agency should be with Indian residents.
The notification is available on the website of MCA and can be accessed from the link below