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On 31st October 2022, IBBI has amended the IBBI( Model Byelaws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 vide IBBI( Model Byelaws and Governing Board of Insolvency Professional Agencies) (Second Amendment) Regulations, 2022.
Key Highlights of the amendments are as follows:
1. Imposition of Monetary Penalty by IPAs
With this amendment, IBBI has prescribed the threshold limits of monetary penalty that can be imposed by the Disciplinary Committee of Insolvency Professional Agencies (IPAs) against the contraventions done by their professional members.
Following is the table showing two types of penalties that may be imposed by the disciplinary committee of IPA against the below contraventions by their professional members:
| Up to ₹1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000. | Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000. |
| Fails to submit any disclosure, returns etc. to IPA or submit any inadequate or incorrect disclosures, returns etc. as required under the Code and regulations | Accepts any assignment having conflict of interest with stakeholders. |
| Fails to maintain records properly relating to any of his assignments | Rejects any claim without any proper reason or fails to exercise due diligence in claim verification |
| Fails to supply the information called for or to comply with the requirements of information sought by the Agency, Board, Adjudicating Authority or the Appellate Authority or does not cooperate with the inspection or investigating authority. | Fails to comply with the directions issued by AA or Appellate Authority |
| Fails to provide notice regarding meetings of creditors. | Outsource his duties and obligations |
| Enters into contract or agreement with professionals in an incomplete and improper manner. | Fails to appoint registered valuers |
| Contravenes any provision of the bye-laws, or regulations for which no specific penalty has been provided. | Fails to make public announcements in the manner provided |
| Fails to reject resolution plans from ineligible resolution applicants. | |
| Fails to take action in respect of preferential, undervalued, fraudulent or extortionate credit transactions. |
2. Relationship disclosure by IPs
It is also amended that IPAs shall facilitate the relationship disclosure from its professional members and disseminate the disclosures on its website in the format issued by Board within 3 working days of receipt of the disclosure. IPA shall also ensure receipt of confirmation from its professional member that the appointment of every other professional is at arm’s length.
3. Format of Compliance Certificate
The compliance officer shall submit to the Board, a compliance certificate annually in the format issued by the Board, verifying that the insolvency professional agency has complied with the provisions of Code and regulations.
The Amendment notification may be viewed at: Click Here
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