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Insolvency professional agencies must submit their bye-laws to the Board, maintain consistency with model bye-laws, and publish them on their websites. The governing board must have a minimum of seven directors, including a managing director, independent directors, and shareholder directors. More than half of the directors must be persons resident in India. The number of independent directors must not be less than the number of shareholder directors. Professional members must obtain an authorisation for assignment from the agency before undertaking assignments under the Code. The disciplinary committee may impose penalties, suspend members, or expel members for gross violations.
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INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (MODEL BYE- LAWS AND GOVERNING BOARD OF INSOLVENCY PROFESSIONAL AGENCIES) REGULATIONS, 20161
[Amended upto 24-04-2020]
IBBI/2016-17/GN/REG001.— In exercise of the powers conferred by sections 196, 203 and 205 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Insolvency and Bankruptcy Board of India hereby makes the following Regulations, namely -
(2) These Regulations shall come into force on the date of their publication in the Official Gazette.
(a) “Board” means the Insolvency and Bankruptcy Board of India established under section 188 of the Code;]3
(aa) “Code” means the Insolvency and Bankruptcy Code, 2016 (31 of 2016);]
(b) “Governing Board” means the Board of Directors, as defined under section 2(10) of Companies Act, 2013 (18 of 2013), of the company registered as an insolvency professional agency;
(c) “model bye-laws” means the model bye-laws as contained in the Schedule to these Regulations.
1Vide Notification No. IBBI/2016-17/GN/REG001, dated 21st November, 2016, published in Gazette of India, Extraordinary, Part III, Sec.4, vide No. 421, dated 22nd November, 2016 (w.e.f. 22.11.2016). 2 Inserted by Notification No. IBBI/2018-19/GN/REG35, dated 11th October, 2018 (w.e.f. 11-10-2018). 3 Renumbered by Notification No. IBBI/2018-19/GN/REG35, dated 11th October, 2018 (w.e.f. 11-10-2018). Before renumbered, it stood as under: “(a) “Code” means the Insolvency and Bankruptcy Code, 2016 (31 of 2016).”
(2) Unless the context otherwise requires, words and expressions used and not defined in these Regulations shall have the meanings assigned to them in the Code.
(2) The bye-laws shall provide for all matters specified in the model bye-laws.
(3) The bye-laws shall at all times be consistent with the model bye-laws.
(4) The insolvency professional agency shall publish its bye-laws, the composition of all committees formed, and all policies created under the bye-laws on its website.
(2) A resolution passed in accordance with sub-regulation (1) shall be filed with the Board within seven days from the date of its passing, for its approval.
(3) The amendments to the bye-laws shall come into effect on the seventh day of the receipt of the approval, unless otherwise specified by the Board.
(4) The insolvency professional agency shall file a printed copy of the amended bye-laws with the Board within fifteen days from the date when such amendment is made effective.
4[5. Composition of the Governing Board.- (1) The Governing Board shall consist of-
Provided that the Governing Board shall have minimum seven directors.
(2) The managing director shall not be considered either an independent director or a shareholder director.
(3) Any employee of an insolvency professional agency may be appointed as a director on its Governing Board in addition to the managing director, but such director shall be deemed to be a shareholder director.
(4) More than half of the directors shall be persons resident in India at the time of their appointment, and at all times during their tenure as directors.
(5) The number of independent directors shall not be less than the number of shareholder directors:
Provided that no meeting of the Governing Board shall be held without the presence of at least one independent director.
(6) An independent director shall be an individual-
4 Substituted by Notification No. IBBI/2018-19/GN/REG35, dated 11th October, 2018 (w.e.f. 11-10-2018). Regulation 5, before substitution stood as under: “5.(1) The Governing Board shall have a minimum of seven directors. (2) More than half of the directors shall be persons resident in India at the time of their appointment, and at all times during their tenure as directors. (3) Not more than one fourth of the directors shall be insolvency professionals. (4) More than half of the directors shall be independent directors at the time of their appointment, and at all times during their tenure as directors: Provided that no meeting of the Governing Board shall be held without the presence of at least one independent director. (5) An independent director shall be an individual- (a) who is a person of ability and integrity; (b) who has expertise in the field of finance, law, management or insolvency. (c) who is not an insolvency professional; (d) who is not a relative of the directors of the Governing Board; (e) who had or has no pecuniary relationship with the insolvency professional agency, or any of its directors, or any of its shareholders holding more than ten percent of its share capital, during the two immediately preceding financial years or during the current financial year; (f) who is not a shareholder of the insolvency professional agency; (g) who is not a member of a governing council of any of the shareholders holding more than ten percent of the share capital of the insolvency professional agency; and (6) The directors shall elect an independent director as the Chairperson of the Governing Board. Explanation - For the purposes of this Regulation, any fraction contained in ‘more than half’ shall be rounded off to the next higher number; and (a) ‘not more than one- fourth’ shall be rounded down to the next lower number.”
(7) An independent director shall be nominated by the Board from amongst the list of names proposed by the insolvency professional agency.
(8) An individual may serve as an independent director for a maximum of two terms of three years each or part thereof, or up to the age of 5[seventy-five years], whichever is earlier.
(9) The second term referred to in sub-regulation (8) may be subject to a satisfactory performance review of the first term by the Governing Board.
(10) A cooling off period of three years shall be applicable for an independent director to become a shareholder director in the same or another insolvency professional agency.
