Insolvency Board Amends Rules To Check Conflict Of Interest Of Insolvency Professionals [Read Notification]

In order to curb related party transactions and keep a check on conflict of interest, the Insolvency and Bankruptcy Board of India has brought about certain amendments in Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2019, and the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2019.

Following are the significant changes that have been notified through the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2019:

1. An insolvency professional shall not accept or undertake any assignment as interim resolution professional, resolution professional, liquidator, bankruptcy trustee, authorised representative or in any other role under the Insolvency and bankruptcy Code, 2016 unless he holds an 'Authorisation for Assignment' issued by his Insolvency Professional Agency. This is effective from 1st January, 2020.

2. An insolvency professional shall not engage in any employment when he holds an Authorisation for Assignment or when he is undertaking an assignment. This would enable an individual to seek registration as an insolvency professional even when he is in employment. He must, however, discontinue employment when he wishes to have an Authorisation for Assignment. He may surrender Authorisation for Assignment when he wishes to take up employment.

3. Where an insolvency professional has conducted a corporate insolvency resolution process, he and his relatives shall not accept any employment, other than an employment secured through open competitive recruitment, with, or render professional services, other than services under the Code to a creditor having more than ten percent voting power, the successful resolution applicant, the corporate debtor or any of their related parties, until a period of one year has elapsed from the date of his cessation from such process.

4. An insolvency professional shall not engage or appoint any of his relatives or related parties, for or in connection with any work relating to any of his assignment

In the pursuance of the same purpose, changes that have been introduced through Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2019 are:

1. An Insolvency Professional Agency shall issue/renew an Authorisation for Assignment to insolvency professionals in accordance with its Bye-laws.

2. Subject to meeting other requirements, an insolvency professional shall be eligible to obtain an Authorisation of Assignment if he has not attained the age of seventy years.

3. Subject to meeting other requirements, an individual may serve as an independent director on the Governing Board of an Insolvency Professional Agency up to the age of seventy-five years. 

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