IBBI Proposes Minimum Shareholding Norms for IPE Directors and Partners

Discussion Paper; Dated: 17.11.2025

1. Background

The Insolvency and Bankruptcy Board of India (IBBI) has issued a discussion paper inviting stakeholder views on proposals aimed at enhancing governance, accountability, and transparency within Insolvency Professional Entities (IPEs).

The focus of the paper is on the role, responsibility, and participation of members who are appointed as directors or partners in an IPE.

2. Rationale for the Proposal

IBBI has noted several concerns in existing IPE structures, including:

• Wide variation in ownership and control models,
• Instances of nominal or negligible participation by individuals designated as directors/partners,
• Potential misalignment between responsibility and economic stake, and
• Challenges relating to fairness, accountability, and governance discipline.

Such gaps may affect the quality of oversight, decision-making integrity, and overall functioning of IPEs.

3. Key Proposal – Minimum Shareholding/Capital Contribution

To address these concerns, the discussion paper proposes introducing a minimum shareholding or capital contribution requirement for members appointed as:

• Directors (in the case of company-form IPEs), and
• Partners (in LLP-form or partnership-form IPEs).

The objective of this threshold is to:

• Ensure meaningful financial participation,
• Strengthen ownership–responsibility alignment,
• Promote greater accountability, and
• Enhance the governance framework across IPEs.

4. Intended Outcomes

The proposed measure is expected to:

• Reduce token appointments or nominal designations,
• Encourage active involvement by directors/partners,
• Improve transparency and fairness in internal functioning, and
• Create a more robust and professional IPE ecosystem supportive of the broader insolvency resolution framework.

5. Public Consultation

IBBI has invited comments from insolvency professionals, IPEs, stakeholders, and the public to refine the proposed framework.

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