Before the Insolvency and Bankruptcy code, 2016 there was no special law to regulate Insolvency and Bankruptcy in India. Various laws were enforced to regulate Insolvency and Bankruptcy system in India.The Presidency Towns Insolvency Act, 1909 and Provisional Insolvency Act, 1920, Companies Act, 2013,Sick Industrial Companies (Special Provisions) Repeal Act, 2013,Limited Liability Partnership Act, 2008, Secularization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002,Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and, Indian Partnership Act, 1932 regulated the matter of Insolvency and Bankruptcy of Individual and Corporate person.
Insolvency and Bankruptcy code, 2016 is a consolidate enactment of various code. This code provides single window clearance system of all earliest enactment. Section 2 of the code states that the provisions of code shall apply to the following person:
- Any company incorporated under the Companies Act, 2013 or any other previous law.
- Any other company which is governed by any Special Act
- Limited Liability Partnership incorporated under the Limited Liability Partnership Act, 2008
- Partnership firm whether registered or not under the Partnership Act, 1932
- Any Individual Person.
The code extends to the Whole of India.
PROVIDED THAT the provisions applicable on the Partnership Firm and Individual person shall not apply to the state of Jammu and Kashmir.
Constitution of the Insolvency and Bankruptcy Board of India:
The board shall be a body corporate having perpetual succession, and shall consists of the following members:
- A Chairperson
- At least three members who shall be an officer of the Central Government and shall not be person of any rank below the rank of the Joint Secretary or equivalent:
- One shall represent the Ministry of Finance
- One shall represent the Ministry of Corporate Affairs, &
- One shall represent the Ministry of Law
- One member which shall be nominated by Reserve Bank of India.
- Five other members which shall be nominated by Central Government in which at least three members shall be whole time members.
Insolvency professional agency:
Insolvency professional agency shall be a section 8 company incorporated under companies Act, 2013.
Any section 8 company wanting to become an Insolvency Professional Agency, is required to get itself registered with the Insolvency and Bankruptcy Board of India as per section 201 of Insolvency and Bankruptcy Code, 2016.
Thus, an Insolvency Professional Agency shall take a Certificate of Registration from the Insolvency and Bankruptcy Board of India.
Function of Insolvency professional agency:
- Grant membership to the person on payment of membership fees.
- The Insolvency Professional Agency may suspend or cancel the membership,if any member does not fulfills the criteria specified in the regulation and bye-laws.
- The Insolvency Professional Agency shall redress the grievances of members.
- Every Insolvency Professional Agency shall make bye-laws for standard of Professional Conduct of the members.
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