Registration

Regulation 3 Eligibility for registration

(1) No person shall be eligible for registration as an insolvency professional agency unless it is a company registered under

section 8 of the Companies Act, 2013, and –

     (a) its sole object is to carry on the functions of an insolvency professional agency under the Code;

     (b) it has bye-laws and governance structure in accordance with the Insolvency and Bankruptcy Board of India (Model

     Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016;

     (c) it has a minimum net worth of ten crore rupees;

     (d) it has a paid-up share capital of five crore rupees;

     (e) it is not under the control of any person resident outside India;

     (f) not more than forty-nine per cent. of its share capital is held, directly or indirectly, by persons resident outside India;

     (g) it is not a subsidiary of a body corporate through more than one layer; and

     (h) the applicant, its promoters, its directors and its shareholders are fit and proper persons.

Explanation 1.- For the purposes of clause (g), “layer” in relation to a body corporate means its subsidiary.

Explanation 2.- For determining whether a person is fit and proper under clause (h), the Board may take into account any

consideration as it deems fit, including but not limited to the following criteria, namely: –

     (i) integrity, reputation and character,

     (ii) absence of conviction and restraint orders,

     (iii) competence including financial solvency and net worth.

(2) No person shall at any time, directly or indirectly, either individually or together with persons acting in concert, acquire or

hold more than five per cent. of the paid-up equity share capital in an insolvency professional agency:

Provided that-

     (i) a stock exchange;

     (ii) a depository;

     (iii) a banking company;

     (iv) an insurance company;

     (v) a public financial institution; and

     (vi) a multilateral financial institution, may, acquire or hold, directly or indirectly, either individually or together with

     persons acting in concert, up to fifteen per cent. of the paid-up equity share capital of an insolvency professional agency:

Provided further that-

     (i) the Central Government;

     (ii) a State Government; and

     (iii) a statutory regulator, may, acquire or hold, directly or indirectly, up to hundred per cent. of the paid-up equity share

     capital of an insolvency professional agency.

VL Note : –

Regulation 4 Application for registration or renewal thereof

(1) A company eligible for registration as an insolvency professional agency, may make an application to the Board in Form A

of the Schedule to these Regulations, along with a non-refundable application fee of ten lakh rupees.

(2) An insolvency professional agency who has been granted registration under Regulation 5, may six months before the

expiry of such registration, make an application for renewal in Form A of the Schedule to these Regulations, along with a

non-refundable application fee of five lakh rupees.

(3) The Board shall acknowledge an application made under this Regulation within seven days of its receipt.

(4) The Board shall examine the application, and give an opportunity to the applicant to remove the deficiencies, if any, in

the application.

(5) The Board may require the applicant to submit, within reasonable time, additional documents, information or clarification

that it deems fit.

(6) The Board may require the applicant to appear, within reasonable time, before the Board in person, or through its

authorised representative for clarifications required for processing the application.

VL Note : –

Regulation 5. Grant of certificate of registration

(1) If the Board is satisfied, after such inspection or inquiry as it deems necessary and having regard to the principles

specified in section 200 of the Code, that the applicant-

       (a) is eligible under Regulation 3;

       (b) has adequate infrastructure to perform its functions under the Code;

       (c) has in its employment, persons having adequate professional and other relevant experience, to enable it to perform

       its functions under the Code; and

       (d) has complied with the conditions of the certificate of registration, if he has submitted an application for renewal

       under Regulation 4(2) it may grant or renew a certificate of registration to the applicant to carry on the activities of an

       insolvency professional agency in Form B of the Schedule to these Regulations, within sixty days of receipt of the

       application, excluding the time given by the Board for removing the deficiencies, or presenting additional documents,

       information or clarification, or appearing in person, as the case may be.

(2) The registration shall be subject to the conditions that the insolvency professional agency shall –

        (a) abide by the Code, rules, regulations, and guidelines there under and its bye-laws;

        (b) at all times after the grant of the certificate continue to satisfy the requirements under sub-regulation (1);

        (c) pay an annual fee of five lakh rupees to the Board, within fifteen days from the date of commencement of the

        financial year:

          Provided that no annual fee shall be payable in the financial year in which an insolvency professional agency is granted

registration or renewal, as the case may be:

Provided further that without prejudice to any other action which the Board may take as permissible under the Code, any

delay in payment of fee by an insolvency professional agency shall attract simple interest at the rate of twelve percent per

annum until paid.

Illustration

(a) Where an insolvency professional agency is registered on 1st December, 2016 upon receipt of an application fee of ten

lakh rupees along with the application for registration, no further fee is required to be paid for the financial year 2016-17.

The annual fee of five lakh rupees becomes due on 1st April, 2017 and shall be paid by 15th April, 2017 for the financial year

2017-18. It becomes similarly due on 1st April, 2018 to be paid by 15th April, 2018, on 1st April, 2019 to be paid by 15th

April, 2019, on 1st April, 2020 to be paid by 15th April, 2020 and on 1st April, 2021 to be paid by 15th April, 2021.

Thereafter, the insolvency professional agency may apply for renewal of registration along with an application fee of five lakh

rupees. If renewal is granted, there will be no annual fee for 2021-22.

(b) Where the annual fee is paid on 20th April, 2017, interest at the rate of twelve percent per annum shall be paid for the

delay of five days.

        (d) seek approval of the Board when a person, other than a statutory body, seeks to hold more than ten per cent,

        directly or indirectly, of the share capital of the insolvency professional agency;

        (e) take adequate steps for redressal of grievances; and

        (f) abide by such other conditions as may be specified.

(3) The certificate of registration shall be valid for a period of five years from the date of issue.

VL Note : –

Regulation 6.Procedure for rejecting application

(1) If, after considering an application made under Regulation 4, the Board is of the prima facie opinion the registration ought

not be granted or renewed, or be granted or renewed with additional conditions, it shall communicate the reasons for forming

such an opinion and give the applicant an opportunity to explain why its application should beaccepted, within fifteen days of

the receipt of the communication from the Board, to enable it to form a final opinion.

(2) The communication under sub-regulation (1) shall be made to the applicant within forty-five days of receipt of the

application, excluding the time given by the Board for removing the deficiencies, presenting additional documents,

information or clarifications, or appearing in person, as the case may be.

(3) After considering the explanation, if any, given by the applicant under sub-regulation (1), the Board shall communicate its

decision to-

      (a) accept the application, along with the certificate of registration, or

      (b) reject the application by an order, giving reasons thereof within thirty days of receipt of explanation.

(4) The order rejecting an application for renewal of registration shall require the insolvency professional agency to-

       (a) discharge pending obligations;

       (b) continue its functions till such time as may be specified, to enable the enrolment of its members with another

       insolvency professional agency; and

       (c) comply with any other directions as considered appropriate.

VL Note : –