Bankruptcy Board Tightens Norms For Insolvency Resolution Professionals
In a significant move, the Insolvency and Bankruptcy Board of India has tightened norms governing resolution professionals wherein restrictions will also be in place for their relatives from taking up employment after completion of a resolution process.
Insolvency resolution professionals would be barred from having employment when they are in possession of authorisation to take up work under the insolvency law. Besides, an insolvency professional and his or her relatives cannot accept any employment from the successful resolution applicant concerned for one year, as per the amended norms.
An insolvency professional should not undertake any assignment unless he or she holds an 'Authorisation for Assignment' issued by the insolvency professional agency concerned. This would be effective from January 1, 2020, according to a release.
This would be applicable for an individual acting as an interim resolution professional, resolution professional, liquidator, bankruptcy trustee, authorised representative or in any other role under the Insolvency and Bankruptcy Code. "An insolvency professional shall not engage in any employment when he holds an 'Authorisation for Assignment' or when he is undertaking an assignment.
"This would enable an individual to seek registration as an insolvency professional even when he is in employment. He must, however, discontinue employment when he wishes to have an 'Authorisation for Assignment'," the release said.
Insolvency professionals or their relatives should not accept any employment, other than employment secured through open competitive recruitment, from certain entities for one year after completion of a particular resolution process. They should not also render professional services.
This would be applicable in the case of a "creditor having more than ten per cent voting power, the successful resolution applicant, the corporate debtor or any of their related parties", the release said.
"An insolvency professional shall not engage or appoint any of his relatives or related parties, for or in connection with any work relating to any of his assignment," it added. The IBBI has notified amended regulations related to insolvency professionals as well as model bye-laws and the governing board of insolvency professional agencies.
"An insolvency professional agency shall issue/ renew an 'Authorisation for Assignment' to insolvency professionals in accordance with its bye-laws. "Subject to meeting other requirements, an insolvency professional shall be eligible to obtain an 'Authorisation of Assignment' if he has not attained the age of 70 years," the release said. Further, an individual would be permitted to serve as an independent director on the governing board of an insolvency professional agency up to the age of 75 years.