How to become an Insolvency Professional

How to become an Insolvency Professional?

Who is an Insolvency Professional?

Section 206 of the Insolvency and Bankruptcy Code, 2016 (Code) provides as follows:

“No person shall render his services as insolvency professional under this Code without being enrolled as a member of an insolvency professional agency and registered with the Board.”

An Insolvency Professional is one who is registered with the Insolvency and Bankruptcy Board of India (IBBI). They are enrolled with an Insolvency Professional Agency(IPA) and they are involved in the resolution and dissolution process of an insolvent individual, companies, LLPs or partnerships. These professionals are authorised to act on behalf of such insolvent individual, companies etc.

To become an Insolvency Professional,requires the following:

  • Passing of Limited Insolvency Examination
  • Enrolment as professional member with an Insolvency Professional Agency
  • Completion of Pre-Registration Education Course
  • Registration with IBBI

Eligibility, qualifications, experience, enrolment process and registration as an Insolvency Professional

Step-I: Eligibility, qualifications & experience to Register as an Insolvency Professional (IP) with IBBI /Enrol Professional Member with an Insolvency Professional Agency(IPA):

A person should have to fulfill the following both criteria (A & B) to register as an Insolvency Professional:

A. Qualifications & experience:
  Professional Course Graduation National Insolvency Programme(NIP) Graduate Insolvency Programme(GIP)
Qualifications

CA, CS, CMA and Advocate who has enrolled as a member of respective Institute/Bar Council and

A Graduate

Successfully completed the National Insolvency Programme, as may be approved by the IBBI.

(IBBI has yet to notify this programme.)

Successfully completed the Graduate Insolvency Programme (GIP), as may approved by the IBBI.

Experience has 10 years of experience who has 15 years of experience in management, after receiving a Bachelor’s degree from a university established or recognized by law.     
Ref. Regulation of the IBBI (Insolvency Professionals) Regulations,2016 Regulation 5(c)(iv) Regulation 5(c)(iii) Regulation 5(c)(i). Regulation 5(c)(ii)
Note: The person who has one of the above qualifications must pass the Limited Insolvency Examination conducted by IBBI.

B. Eligibility:
Regulation 4 of the IBBI (Insolvency Professionals) Regulations, 2016 specifies the eligibility criteria to register as an IP. According to this Regulation, no individual shall be eligible to be registered as an insolvency professional:

  • (a) If he is a minor.
  • (b) If he is not a person resident in India.
  • (c) If he does not have the qualification and experience specified in Regulation 5.(as specified in A.)
  • (d) If he has been convicted by any competent court for an offence punishable with imprisonment for a term exceeding six months or for an offence involving moral turpitude, and a period of five years has not elapsed from the date of expiry of the sentence. Provided that if a person has been convicted of any offence and sentenced in respect thereof to imprisonment for a period of seven years or more, he shall not be eligible to be registered.
  • (e) If he is an undischarged insolvent or has applied to be adjudicated as an insolvent.
  • (f) If he has been declared to be of unsound mind.
  • (g) If he is not a fit and proper person. For determining whether an individual is fit and proper under these Regulations, IBBI may take account of any consideration as it deems fit, including but not limited to the following criteria-
    • (i) integrity, reputation and character,
    • (ii) absence of convictions and restraint orders, and
    • (iii) competence, including financial solvency and net worth.

Step-II: Enrolment with IPA as a Professional Member

He is required to apply for enrolment as a professional member with an Insolvency Professional Agency (IPA) within twelve months before the date of his passing the Limited Insolvency Examination [Regulation 5(a) of the IBBI (Insolvency Professionals) Regulations, 2016].

Procedure for Enrolment as a Professional Member

(a) IPA shall examine the application in accordance with the applicable provisions of the Code, and rules, regulations and guidelines thereunder.

(b) Regulation 7(2)(h) of the IBBI (Insolvency Professionals) Regulations, 2016 requires an Insolvency Professional to abide by the Code of Conduct at all the times.

(c) Clause 23 of the Code of Conduct reads as follows:

“An insolvency professional must not engage in any employment when he holds a valid 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.

(d) Before enrolling a person as its Professional Member IPA is required to verify the followings:

I. Whether any disciplinary proceedings are pending, or any disciplinary action has been taken at any time in the preceding three years against the professional member by the ICAI, ICSI, ICAI(Cost), or Bar Council, of which he is a Member.

II. Whether a regulator ICAI, ICAI (Cost), ICSI, or Bar Council has initiated any criminal proceeding against the professional member and is pending for disposal?

III. Whether the professional member had an unblemished service with the last employer if he was in employment? The applicant has to submit a Conduct Certificate from his last employer.

IV. Whether the name of the professional member appears in the databases of Ministry of Corporate Affairs regarding

i. Directors disqualified under section 164 of the Companies Act, 2013, or
For this purpose, the applicant needs to provide his DIN (if he has one) or has to declare that he has no DIN.

ii. Proclaimed Offenders under Section 82 of the Code of Criminal Procedure, 1973.

V. Whether the professional member has been penalised by a market regulator i.e. SEBI and CCI in the last three years?

VI. Whether the name of professional member appears in the list of defaulters of RBI/Credit Information Company. For Credit Information, the applicant has to provide his CIBIL report after obtaining the same from a registered Credit Information Company.

(e) After examination of the application,IPA shall give an opportunity to the applicant to remove the deficiencies, if any, in the application.

(f) IPA may require an applicant to submit additional documents, information or clarification that it deems fit, within reasonable time.

(g) IPA may reject an application if the applicant does not satisfy the criteria for enrolment or does not remove the deficiencies or submit additional documents or information to its satisfaction, for reasons recorded in writing.

(h) The rejection of the application shall be communicated to the applicant stating the reasons for such rejection, within thirty days of the receipt of the application, excluding the time given for removing the deficiencies or presenting additional documents or clarification by the IPA, as the case may be.

(i) The primary acceptance of the application shall be communicated to the applicant, along with the enrolment number.

(j) IPA will issue a Certificate of Membership to the enrolled member.

Appeal against the order of Application for Enrolment:

(a) An applicant aggrieved of a decision rejecting his application may appeal to the Membership Committee of the Agency within thirty days from the receipt of such decision.
(b) The Membership Committee shall pass an order disposing of the appeal in the manner it deems expedient, within thirty days of the receipt of the appeal.

Step-III: Passed the Limited Insolvency Examination(see later in details):
The person who has one of the qualifications alongwith experience as mentioned in Step-I must pass the Limited Insolvency Examination conducted by IBBI.

Step-IV: Pre-Registration Educational Course

After his enrolment as professional member, he is required to complete the mandatory 50 hours Pre-Registration Educational Course from an IPA as per Regulation 5(b) of the IBBI (Insolvency Professionals) Regulations, 2016.

Step V. Apply for Registration as an Insolvency Professional

Thereafter, he will be eligible to apply for Registration as an Insolvency Professional with IBBI.

 

Limited Insolvency Examination

I. Who conduct the Limited Insolvency Examination:

  • IBBI is notifying syllabus for the Limited Insolvency Examination from time to time.
  • The syllabus, format, qualifying marks and frequency of the Limited Insolvency Examination shall be published on the website of the Board at least three months before the examination. [Regulation 3(3) of the IBBI (Insolvency Professionals)Regulations, 2016].

II. The format of Examination is as under:

  • The Examination will be conducted online (computer-based in a proctored environment) with objective multiple-choice questions.
  • The duration of the Examination will be two hours.
  • A candidate will be required to answer 89 questions in two hours for a total of 100 marks.
  • There will be a negative marking of 25% of the marks assigned for the question.
  • Passing mark for the Examination is 60%.
  • Passing candidates will be awarded a certificate by the Board.
  • A candidate will be issued a temporary mark sheet on submission of Examination paper
  • No workbook or study material will be provided.

III. Frequency of Examination:
The frequency of Examination is as under:

  • The Examination centres are available at various locations across the country.
  • A candidate needs to enrol and register at IBBI website i.e. www.ibbi.gov.in for Examination by choosing the time, the day and the Examination centre for his Examination.
  • A candidate needs to pay Examination fee of Rs.1500/- (One thousand five hundred rupees only) online on every enrolment.

IV. Syllabus for Examination(w.e.f 01.07.2019):

The syllabus for the Examination is as under:

 

Graduate Insolvency Programme(GIP)

I. Programme Overview:

The Graduate Insolvency Programme (GIP) is the first of its kind programme for those aspiring to take up the discipline of insolvency professional as a career or seeking to take up other roles in the value chain, in India and in foreign jurisdictions. A student who completes the GIP will be eligible for registration as insolvency professional under the Insolvency and Bankruptcy Code 2016, without having to wait to acquire the 10-year experience as required by the Code at present.

II. Duration:

An intensive residential classroom programme of 12 months (32 weeks) and A hands-on internship programme at the cutting edge of the practice for 12 months (48 weeks).

Total : 24 months (80 weeks)

III. Eligibility:

Qualification

    • Chartered Accountant
    • Advocate
    • Cost Accountant
    • Company Secretary
    • B.E / B.Tech
    • Post-graduate with major subjects in Economics
    • Finance, Commerce, Management and Insolvency with aggregate 50% marks

Experience: There is no requirement of any experience.

Age: Should not be more than 28 years of age as on April 15, 2019.

IV. Selection:

  1. Eligible candidates will have to clear written examination.
  2. Based on the performance in the written examination, candidates will be invited for Group Discussion and Personal interview to be held under the oversight of observers who are experts in the subject and members of the faculty.
  3. Personal Interview & Group Discussion of shortlisted candidates.

For more details, visit: https://iica.nic.in/gip/programme.aspx

 

National Insolvency Programme(NIP)

(IBBI is yet to notify this Programme)

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