Insolvency Professional Agency: Meaning, Registration & Functions

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  • Last Updated on 14 July, 2021
Work relating to insolvency resolution is expected to be handled by ‘Insolvency Professionals’. These professionals are required to be registered with ‘Insolvency Professional Agency.’

1. Insolvency Professional Agency Meaning:

Insolvency professional agency means any person registered with the Board (IBBI) under section 201 of Insolvency Code, 2016 as an insolvency professional agency – section 3(20) of Insolvency Code, 2016. The Insolvency Professional Agencies will develop professional standards, code of ethics and be first level regulator for Insolvency professionals members. This will lead to development of a competitive industry for such professionals. ICAI, ICSI and ICMA have already formed section 8 companies and have applied for registration with IBBI as Insolvency Professional Agency.

2. Registration of Insolvency Professional Agency:

Insolvency and Bankruptcy Board of India (Insolvency Professional Agency) Regulations, 2016 make provisions for registration of Insolvency Professional Agency. Such Agency should be incorporated as section 8 company. It should have minimum net worth of Rs. 10 Crores and paid up capital of Rs. 5 Crores. It should not be a subsidiary of subsidiary.
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3. Functions of Insolvency Professional Agency:

Functions of Insolvency Professional Agency have been specified in section 204 of Insolvency Code (effective from 15-11-2016).
 
a) Granting membership to insolvency professionals.
 
b) Lay down standards of professional conduct to its members.
 
c) Monitor performance of members.
 
d) Safeguard rights, privileges and interests of insolvency professionals.
 
e) Suspend member or cancel membership.
 
f) Redress grievances of members.
 
g) Publish information about its functions, list of members, and performance of its members.
 
Application for registration as Insolvency Professional Agency should be made to IBBI in prescribed form with fees.
 
Initially, in-principle approval as Insolvency Professional Agency will be granted for one year. Then during that period, application of registration shall be made with IBBI.
 
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4. Model Bye laws of Insolvency Professional Agency:

Model Bye Laws of Insolvency Professional Agency and provisions relating to Governing Board of Insolvency Professional Agency have been specified in Insolvency & Bankruptcy Board of India Regulations, 2016, notified on 21-11-2016.
 
Insolvency Professional must be ‘professional member’ of such Insolvency Professional Agency.
 
Duties of Professional Members have been specified in the Regulations.
The Insolvency Professional Agency shall have Grievance Redressal Mechanism.
 
The Agency can initiate disciplinary proceedings against its professional members.

5. Control over Insolvency Professional Agency by Board ( IBBI ):

IBBI will exercise control over Insolvency Professional Agency and Insolvency Professional. Complaints can be made to IBBI under section 217 of Insolvency Code.
 
IBBI can carry out investigation of Insolvency Professional Agency and Insolvency Professional under section 218 of Insolvency Code. Disciplinary action can be taken against Insolvency Professional Agency or Insolvency Professional by appointing disciplinary committee under section 220 of Insolvency Code.
 
All these sections have been notified and made effective from 15-11-2016.

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

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