Introduction
On 31.01.2024, the Insolvency and Bankruptcy Board of India (‘IBBI’) introduced significant amendments to the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016[i] (‘IPA Regulations’). This amendment brings changes to reg. 12A, aiming to refine and enhance the regulatory framework governing Insolvency Professional Agencies (‘IPAs’) in India. It specifically addresses the authorization for assignment and its validity period.
Key Amendments:
The focal point of these amendments revolves around reg. 12A, particularly reg. 12A(6), which deals with the authorization for assignment. The amendment introduces two crucial provisions that modify the duration of the authorization and its validity conditions.
Extended Validity Period
The amended reg. 12A(6) specifies that an authorization for assignment issued or renewed by the IPA shall now be valid for a period of one year from the date of issuance or renewal. However, the critical change lies in the introduction of the first proviso that extends the validity till the 30th of June of the year when the one-year period expires if it falls between January 1st and June 30th. Similarly, if the expiration falls between July 1st and December 31st, the authorization will be valid until 31st of December of that year.
Extension in Case of Professional Member Attaining 70 Years
The amendment recognizes the age limit for professional members, stating that if a professional member attains the age of seventy years during the validity period, the authorization for assignment shall remain valid until the date of their seventieth birthday. This second proviso ensures a smoother transition and enables the completion of ongoing assignments without abrupt interruptions due to age-related restrictions.
Legal Implications
The amended IPA Regulations extend the validity of authorizations for assignments based on both the time of expiration and the age of the professional member. This alteration aims to strike a balance between ensuring continuity in ongoing assignments and addressing the age-related limitations of insolvency professionals.
The amendment aligns with the broader objectives of the Insolvency and Bankruptcy Code, 2016, providing flexibility in the regulatory framework while safeguarding the interests of stakeholders involved in the insolvency resolution process. By allowing for a seamless transition and completion of assignments, the IBBI aims to maintain the efficiency and effectiveness of the insolvency resolution mechanism.
End Note:
[i] Notification No. - No. IBBI/2023-24/GN/REG111 dated 31.01.2024.
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Authored by Nitish Solanki, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.