Insolvency Professional – Meaning, Eligibility & Qualification

Meaning of Insolvency Professional

An Insolvency Professional is one who is registered with the Insolvency and Bankruptcy Board of India (IBBI). They are enrolled with an Insolvency Agency and they are involved in the dissolution process of an insolvent individual, companies, LLPs or partnerships. These professionals are authorised to act on behalf of such insolvent individual, companies etc. During the bankruptcy situation, the insolvency professionals play a vital role in liquidating the entity assets and other settlement processes. This process has gained momentum with the government bringing in strict norms through Insolvency and Bankruptcy Code.  

Insolvency Professional Agency

Any agency registered with the IBBI u/s 201 of Insolvency Code, 2016 is referred as an insolvency professional agency. The key function of these agencies are to regulate the activities of insolvency professionals and ensure their development in the industry. These professional members are required to comply with the terms and conditions as specified in the bye-laws of the insolvency agency code. IBBI exercises control over Insolvency professional agency and its professionals with respect to the complaints made under section 217 of Insolvency Code.

Functions of an Insolvency Professional Agency

Following are the functions of Insolvency Professional Agency as specified in section 204 of Insolvency Code (with effect from 15-11-2016):

• Insolvency professional agency has the primary function of granting membership to insolvency professionals.
• These agencies frame the standard of professional conduct and ethics to the members enrolled under them.
• They protect the rights and privileges of the members and safeguard their interests
• They also enquire the member’s grievances and take steps to resolve those.
• The agency continuously monitors member’s performance and they can suspend/cancel membership wherever and whenever required.

Eligibility Criteria for Insolvency Professional

An individual is eligible to become an Insolvency Professional provided, he/she :

• Is an Indian resident and has attained 18 years of age (Majority).
• Is of sound mind and a fit person.
• Is solvent and has not been declared as an insolvent.
• Possess the required qualification and experience as specified by the IBBI.
• Has not been convicted by any competent court/law, 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 gone from the date of expiry of the sentence.

Qualification and Experience

 As a first step, any applicant must get themselves registered with Insolvency Professional agency. Listed below are the required qualifications and experience for an applicant to be registered as an Insolvency Professional:

• They are either required to clear the National Insolvency Examination (or)
• Clear the Limited Insolvency Examination in which case the applicant should have 15 years of experience in management, after receiving a Bachelor’s degree from a university established or recognised by law (or)
• Has passed the Limited Insolvency Examination and has 10 years of experience as –

• A chartered accountant and is a member of the Institute of Chartered Accountants of India (or)
• A company secretary and is a member of the Institute of Company Secretaries of India (or)
• A cost accountant and is a member of the Institute of Cost Accountants of India (or)
• An advocate enrolled with a Bar Council

   Once the above-listedtions are fulfilled, the applicant can start practicing as an Insolvency professional.

Functions of an Insolvency Professional

The primary function of an Insolvency Professional is to assess the financial position of the company, partnership, LLPs, individual etc and to ensure smooth process of its dissolution. These professionals, in certain possible cases look for opportunities to rescue businesses. Otherwise the main functions of an Insolvency Professional are:

• nalyse the financial statement of the company and understand the position.
• Make arrangements to sell all the assets of the liquidating Individual or company.
• Understand the receivables position of the company/Individual and look after the collection process.
• Conduct formal discussions with debtors/creditors and manage their settlement process.
• Check and agree on the creditors’ claims as per the available funds. This is one of the main duties of Insolvency professionals.
• Involve in the fund distribution process after setting aside money required to pay the cost of liquidation.
• Deal with the other competing interest, if any.
• Insolvency professionals are required to  prepare and submit report to the National Company Law Tribunal with respect to the following:
• Liquidation plan and process: This has to be submitted within 75 days of commencement of the process by the insolvency professional.
• Detailed report on the asset memorandum.
• Interim report on how the liquidation process is progressing from time to time.
• Details about the sale of all the assets.
• Discussion with the Debtors and Creditors and the conclusions arrived.
• Final report prior to the dissolution of the company, partnership and others.

Insolvency professionals in high demand: CAs, cost accountants and company secretaries rush to get qualified

“CAs (chartered accountants) have to play a huge role in the insolvency resolution domain,” said Arijit Chakraborty, a practising chartered accountant.

Insolvency and Bankruptcy Board of India

30th March, 2019

Limited Insolvency Examination w.e.f. 1st July, 2019

The Board hereby publishes the syllabus, format etc. of the Limited Insolvency Examination (Examination) under regulation 3(3) of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 for the examination to be conducted from 1st July, 2019.

•    I.    Syllabus for Examination

The syllabus for the Examination is as under:

Sl. No	SUBJECT/ TOPICS	Weight (%)
1.	The Insolvency and Bankruptcy Code, 2016 (Entire Code)	20
2.	Rules and Regulations under the Insolvency and Bankruptcy Code, 2016 (All Rules and Regulations notified under the Code till 30th June, 2019)	20
3.	(i) The Companies Act, 2013 Chapter III – Prospectus and Allotment of Securities Chapter IV – Share Capital and Debentures Chapter V – Acceptance of Deposits by Companies Chapter VI – Registration of Charges Chapter VII – Management and Administration Chapter IX – Accounts of Companies Chapter XV – Compromises, Arrangements and Amalgamations Chapter XVII – Registered Valuers Chapter XVIII – Removal of names of the companies from the register of companies Chapter XX – Winding-up of the companies Chapter XXVII – NCLT and NCLAT Chapter XXVIII Special Courts Chapter XXVIII – Special Courts Chapter XXIX – Punishments (ii) The Limited Liability Partnership Act, 2008 (Nature of LLP; Partners and their Relations; Limitation of Liability; and Financial Disclosures)	08
4.	(i) The Indian Contract Act, 1872 (Of Contracts, Voidable Contracts and Void Agreement; Contingent Contracts; Performance of Contract; Novation, Rescission and Alteration of Contracts; Agency; Consequences of breach of Contract; Indemnity and Guarantee; Surety; Bailment and Pledge; Set off); (ii) The Partnership Act, 1932; (iii) The Sale of Goods Act, 1930 (Sale, Condition and Warranty, Seller's Lien and Damages); (iv) The Transfer of Property Act, 1882; (v) The Specific Relief Act, 1963; and (vi) The Negotiable Instruments Act, 1881	07
5.	(i) The Recovery of Debts due to Banks and Financial Institutions Act, 1993; (ii) The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002; (iii) Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009; (iv) Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (v) Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (vi) Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015; (vii) The Arbitration and Conciliation Act, 1996; and (viii) The Limitation Act, 1963	06
6.	Finance and Accounts (Corporate Finance; Financial Analysis; Liquidity Management; Tax Planning and GST)	07
7.	General Awareness: (i) Constitution of India: Right to Constitutional Remedies; provisions of Union Judiciary; provisions of High Courts in the States; (ii) Rights of Workmen under Labour Laws; (iii) Economy; (iv) Financial Markets; (v) Basic concepts of Valuation; and (vi) Forensic Audit	06
8.	Case Laws- Important Decisions of Supreme Court and High Courts, Decisions of NCLAT and NCLT relating to Corporate Insolvency Resolution, Corporate Liquidation, Voluntary Liquidation and Fast Track Resolution Process. There will be five questions carrying two marks each. (CLICK HERE FOR LIST OF CASES)	10
9.	Case Analysis on Corporate Insolvency Resolution and Liquidation. There will be one comprehension narrating a case and there will be six questions based on the case carrying two marks each.	12
10.	Case Analysis on Individual Insolvency Resolution and Bankruptcy. There will be one comprehension narrating a case and there will be four questions based on the case carrying one marks each.	04
Total		100

This syllabus will be valid for Limited Insolvency Examination w.e.f. from 1st July, 2019.

Note: Wherever any law, an Act of Parliament or any Rule is referred to in the syllabus, the same shall be taken as in force as on 30th June, 2019. This means that any amendment in such laws, Acts or Rules effected after 30th June, 2019 shall be ignored.

•    II.   Format of Examination

The format of Examination is as under:

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

•    III.   Frequency of Examination

The frequency of Examination is as under:

• a.The Examination centres are available at various locations across the country.
• b.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.
• c.A candidate needs to pay Examination fee of Rs.1500/- (One thousand five hundred rupees only) online on every enrolment.