Not-for-profit companies to be eligible to act as insolvency professional agency

Not-for-profit companies having a minimum net worth of Rs 10 crore will be eligible to act as an insolvency professional agency under the Insolvency and Bankruptcy Code.

Moving ahead with implementation of the Code, two sets of regulations have been notified by the Insolvency and Bankruptcy Board of India (IBBI).

The Model Bye-Laws and Governing Board of Insolvency Professional Agencies as well as those pertaining to Insolvency Professional Agencies have been notified.

"These two regulations inter alia provide for the eligibility norms to be a professional member of an insolvency professional agency and also for eligibility norms to be registered with the IBBI as an insolvency professional agency," Corporate Affairs Ministry said in a release today.

They have been notified by IBBI.

Under the regulations, a firm registered under Section 8 of the Companies Act, 2013 -- having minimum net worth of Rs 10 crore -- would be eligible to be an insolvency professional agency.

"More than half of the directors of its board shall be independent directors and not more than one fourth of the directors shall be insolvency professionals," the release said.

Besides, such an entity would have membership, monitoring, grievance redressal and disciplinary committees to regulate as well as have an oversight of the professional members.

Generally, Section 8 companies are not-for-profit entities.

The Code, notified by the government in May this year, seeks to consolidate and amend laws relating to reorganisation as well as insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner.

IBBI, chaired by M S Sahoo, would have 10 members, including four nominated by the government.