Regulation 12 - Recognition of Insolvency Professional Entities. - Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016

CHAPTER V RECOGNITION OF INSOLVENCY PROFESSIONAL ENTITIES Recognition of Insolvency Professional Entities. 12. 1 [(1) A company, a registered partnership firm or a limited liability partnership may be recognised as an insolvency professional entity, if 8 [ (a) its objective is to provide support services to insolvency professionals or to carry on the activities of an insolvency professional or both. ] (b) it has a net worth of not less than one crore rupees; 9 [ (c) majority of its equity shares and voting rights are held by insolvency professionals, who are its directors, in case it is a company; ] (d) majority of capital contribution is made by insolvency professionals, who are its partners, in case it is a limited liability partnership firm or a registered partnership firm; (e) majority of its partners or directors, as the case may be, are insolvency professionals; (f) majority of its whole time directors are insolvency professionals, in case it is a company; and (g) none of its partners or directors is a partner or a director of another insolvency professional entity: 5 [ Provided that the insolvency professional entities recognised before the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Second Amendment) Regulations, 2021 shall comply with the provisions of clauses (b) and (c) on or before 31st December 2021. Explanation.- For the purposes of clause (b) of this sub-regulation, net worth means- (i) the net worth as defined under section 2(57) of the Companies Act, 2013 in case of a company; (ii) sum of partners contribution in the capital account and their undistributed profits net of accumulated losses, if any, in case of a registered partnership firm or limited liability partnership. ] ] 2 [ (2) A person eligible under sub-regulation (1) may make an application for recognition as an insolvency professional entity to the Board in Form C of the Second Schedule along with an application fee of 7 [ two lakh ] rupees. ] 6 [ (3) The Board shall acknowledge an application made under this regulation within seven days of its receipt. (4) The Board may, after examination of the application,- (i) require the applicant to submit, within reasonable time, additional documents, information or clarification; (ii) inspect or inquire the applicant; (iii) require any of the directors or partners of the applicant to appear, within a reasonable time, before it in person for any clarifications, as may be necessary for the purpose of considering the application. ] ******************** Notes:- 1. Substituted vide Notification IBBI/2017-18/GN/REG027 Dated 27-03-2018 , before it was read as, (1) A limited liability partnership, a registered partnership firm or a company may be recognised as an insolvency professional entity if- (a) a majority of the partners of the limited liability partnership or registered partnership firm are registered as insolvency professionals; or (b) a majority of the whole-time directors of the company are registered as insolvency professionals, as the case may be. 2. Substituted vide Notification No. IBBI/2018-19/GN/REG036 dated 11-10-2018 before it was read as (2) A person eligible under sub-regulation (1) may make an application for recognition as an insolvency professional entity to the Board in Form C of the Second Schedule to these Regulations. 3. Substituted vide Notification No. IBBI/2020-21/GN/REG061 dated 30-06-2020 before it was read as (a) its sole objective is to provide support services to insolvency professionals, who are its partners or directors, as the case may be; 4. Substituted vide Notification No. IBBI/2021-22/GN/REG077 dated 22-07-2021 before it was read as its shares 5. Substituted vide Notification No. IBBI/2021-22/GN/REG077 dated 22-07-2021 before it was read as Provided that the insolvency professional entities recognised as on the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2018 shall comply with the provisions of clauses (a), (b) (c) and (d) on or before 30th September, 2018 and the provisions of clauses (e), (f) and (g) on or before 30th June, 2018. 6. Inserted vide Notification No. IBBI/2021-22/GN/REG077 dated 22-07-2021 7. Substituted vide Notification No. IBBI/2022-23/GN/REG097 dated 20-09-2022 w.e.f. 01-10-2022 before it was read as, fifty thousand 8. Substituted vide Notification No. IBBI/2022-23/GN/REG099 dated 28-09-2022 before it was read as, 3 [ (a) its sole objective is to provide support services to insolvency professionals; ] 9. Substituted vide Notification No. IBBI/2022-23/GN/REG099 dated 28-09-2022 before it was read as, (c) majority of 4 [ its equity shares ] is held by insolvency professionals, who are its directors, in case it is a company;