CAIRR Update July 23, 2021

Company to change its name within a period of 3 months (as against 6 months), upon the receipt of the direction of the Central Government. Also empowering the Central government to allot a new name if the Company fails to comply withing the period stipulated  under Section 16 of the Act.

Defines the format and procedure for allotment of new name for the Company that fails to comply with the order issued by the Central Government under Section 16(1) of the Act, requiring the Registrar to issue a fresh certificate of incorporation in Form No.INC-11C.

Such Company shall at once make necessary compliance with the provisions of section 12 of the Act and the statement, “Order of Regional Director Not Complied (under section 16 of the Companies Act, 2013)” shall be inlcuded below the Company’s name.

Amends the model bye laws as prescribed in the schedule to IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016, requiring it to promptly realise the monetary penalty imposed by the Disciplinary Committee and credit the same to the Insolvency and Bankruptcy Board, formed under section 222 of the Code instead of the Insolvency and Bankruptcy Fund, constituted under Section 224 of the Code.

Key highlights of the amendment are as follows:

1. Qualification and Experience for Insolvency Professional registration: Eligible educational qualification and professional experience to include Bachelors in Law and full-time P.G Diploma in Management.

2. Provision for Registration as an Insolvency Professional for a Limited Period is omitted.

3. Registration of an Insolvency Professional Agency:

a. Criteria for registration of IPAs amended, which now requires the IPAs registered prior to this notification to ensure before 30/12/2021 that majority of its equity shares is held by insolvency professionals, who are its directors, in case it is a company and has net worth, as defined in the proviso, of not less than one crore rupees.

b. The Board shall acknowledge an application made for registration of an IPA within seven days of its receipt.

4. Timelines for communication on the application for registration of an IPA: If the Board is satisfied with the application, then it may grant certificate of recognition within 60 days of receipt of such application. The Board may also call for opinion of the applicant along with submission of additional documents before rejecting/approving the application, which shall be communicated within 30 days from the date of receipt of the opinion/explanation.

5. Continual disclosures by an IPA: An IPA shall intimate to the Board within 30 days (as against 7 days), when an individual ceases to be/joins as its director or partner in the prescribed format.

6. Number of assignments undertaken by an IP: IBBI has clarified that an IP may, at any point of time, not have more than 10 assignments as resolution professional in CIRP, of which not more than 3 shall have admitted claims exceeding One Thousand Crore rupees each.