Insolvency professional agency functions & registration procedure

WHAT IS THE MEANING OF PROFESIONAL AGENCY & ITS FUNCTIONS

Insolvency Professional Agency as defined under Insolvency and Bankruptcy Code 2016 means any person registered with the Board under section 201 as an insolvency professional agency.

In simple terms Professional Agency is a section 8 Company registered with Board of Insolvency & Bankruptcy of India (herein after referred to as “the Board”) to discharge the following functions as specified under The Insolvency and Bankruptcy Code 2016:

1. Grant membership to Insolvency Professionals who wants to be its member and fulfil all requirements set out in its byelaws on payment of membership fee.
2. Lay down standards of professional conduct for its members.
3. Monitor the performance of its members.
4. Safeguard the rights, privileges and interests of insolvency professionals who are its members.
5. Suspend or cancel the membership of insolvency professionals who are its members on the grounds set out in its bye-laws.
6. Redress the grievances of consumers against insolvency professionals who are its members.
7. publish information about its functions, list of its members, performance of its members and such other information as may be specified by regulations

REGISTRATION FRAMEWORK

The frame work for registration of Professional Agency provided under section 199 to 201 & Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016. Section 199 make it mandatory for every person who desire carry on the business of Insolvency Professional Agency to obtain the registration certificate from the Board before starting the business and section 200 provides the principles to be observed by the Board while granting the registration certificate to the Insolvency Professional Agency. Section 201 Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016 provides for the procedure of applying to the Board for the registration of Insolvency Professional Agency and the manner in which same shall be dealt by the Board, method of surrendering the registration certificate and the provisions for suspension and cancelation of Registration Certificate.

ELIGIBILITY CRITIERIA:

Only Companies registered under section 8 of Companies Act 2013 which satisfy the following conditions are authorised to be registered as Insolvency Professional Agency:

- have sole object to carry on the functions of an insolvency professional agency
- 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), 2016

1. has a minimum net worth of ten crore rupees
2. has a paid-up share capital of five crore rupees
3. not under the control of person(s) resident outside India
4. not more than 49% of its share capital is held, directly or indirectly, by persons resident outside India
5. its promoters, its directors and persons holding more than 10% of its share capital and the Company itself are fit and proper persons.

Explanation: For determining whether a person is fit and proper inter-alia following facts shall be considered:

1. integrity, reputation and character,
2. absence of convictions and restraint orders,
3. competence including financial solvency and net worth                             
4. is not a subsidiary of a body corporate through more than one layer.

REGISTRATION PROCEDURE

1. An application for the registration of Company as an Insolvency Professional Agency shall be made to the Board in the Form A of Schedule to the Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016.

2. The application shall state specifically the following:

• Name, Address of Registered office and Principal place of business, CIN, PAN.
• Details of the person authorised to make application which shall include Name, Designation and Contact details.
• Confirmation that memorandum & Articles of association and bye-laws are consistent with the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016, and the Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016.
• Clause number of the provisions of the bye-laws which are in addition to the provisions of the model bye-laws specified in the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016
• Details of the persons holding more than 10%, directly or indirectly, of the share capital of the applicant.
• Who is in the control of Applicant Company.
• Details of the Board of Directors of the applicant Company.
• Details of the infrastructure of the Company like number and location of offices, IT and other computer facilities etc.

3. Following documents shall be enclosed with application:

• Board Resolution authorising the director of the Company to make the application.
• Copies of Memorandum and Articles of Association
• By Laws of Company
• In case promoters or person who is in control of the applicant company or person holding more than 10% of shares in applicant company is a Company

4. Board shall consider the application and on being satisfied that applicant:

• Fulfill the eligibility criteria
• has adequate infrastructure to perform its functions
• has in its employment, persons having adequate professional and other relevant experience

Shall grant the certificate of registration.