The Insolvency and Bankruptcy Code, 2016 (“Code”) has been introduced with the primary objective of increasing lender’s confidence and facilitating expansion of the credit market in India. As has been stated in the objects clause, the objective of this new law is to promote entrepreneurship, availability of credit, and balance the interests of all stakeholders by consolidating and amending the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner and for maximization of value of assets of such persons and matters connected therewith or incidental thereto.
While the primary objective of the Code has been clarified by the Government, the Code alsoparallely creates a host of professional opportunities for finance and legalprofessionals. In this article, I am going to focus on how a Management Professional/Chartered Accountant/Company Secretary/Cost Accountant/Advocate can benefit professionally under the regime of the Code.
Professional Opportunities for Management Professionals/ Chartered Accountants/ Company Secretaries/ Cost Accountants and Advocates under the Code
Having perused the Code, I believe that the role ofManagement Professionals, Chartered Accountants, Company Secretaries, Cost Accountants and Advocates (I collectively refer to them as “Professionals”)has expanded significantly under the regime of the Code. Some of the professional avenues that have opened for the above enlistedProfessionals under the Code are enlisted as under:-
Professionals can elect to become Insolvency Professionals (IP’s). IP’s are those licensed professionals that are authorised by Insolvency Professional Agencies (IPA’s)which take up the roles of Interim Resolution Professional/ Resolution Professional/Liquidator/Bankruptcy Trustee in the insolvency resolution process of different entities as have been envisaged under the Code. Insolvency Professional Agencies (IPA’s) are those specialized bodies that are statutorily authorised to execute the task of registration and governance of Insolvency Professionals.
The criteria for registration of an IP are enlisted under the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (“Regulations”).
In order to be eligible for registration as an Insolvency Professional, a Professional has to fulfill the following criteria:-
It is important note that a Chartered Accountant/ Company Secretary/ Cost Accountant/Advocate that appearsfor and clears the LIEneeds to have 10 years of work experience post enrollment (or 15 years post qualification work experience in case of management professionals).
In other words, the work experiencerequirementhas been prescribed is only for the LIEand not the NIE. The Regulations do not prescribe any work experience requirement with respect to the NIE.
If a Professionalfulfills the eligibility criteria, then he has to take the following steps to register himself as an IP:-
The Regulations also float a concept of registration for a limited period as an IP. In order to be registered as an IP for a limited period, the following needs to be noted:-
Professional’s after being registered as IP’s can also establish Insolvency Professional Entities (IPE’s). An IPE as defined under the Regulations is a limited liability partnership, a registered partnership firm or a company that:-
Application for registration as an Insolvency Professional Entity:-
Simply put, an IPE is an incorporated entity comprising of IP’s.In my opinion, the most favourable aspect of incorporating and running an IPE is the sheer potential that it has for expansion. Incorporation as an IPE will also provide the necessary logistical and technical support that is needed for expansion and subsequent business development. Further, it also creates a professional platform for IP’s to interact and grow professionally.
Along with the ambitious intention of restructuring India Inc., the Code brings with itself a host of professional and business opportunities for Management Professionals,Chartered Accountants, Company Secretaries, Cost Accountantsand Advocates. These opportunities carry with themselves a tremendous growth potential. These professionsare going to see tremendous growth in the years to come in the light of their expanded role under the regime of the Code.
Pranav Khatavkar, is a Mumbai based independent legal professional, who has penned India’s first commentary on the Insolvency and Bankruptcy Code, 2016. The book has been previously reviewed on Live Law.
[The opinions expressed in this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of LiveLaw and LiveLaw does not assume any responsibility or liability for the same]
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