IIBI or Insolvency and Bankruptcy board of India came into existence on 1st October 2016, it falls under insolvency and bankruptcy code of 2016. It regulates all the company authorities, keeps a check on debtors, creditors for loans, and check whether the companies are complying with the regulations. It acts as a governing body for insolvency professionals, helps in resolving corporate liquidation, corporate insolvency, and individual insolvency and helps to implement provisions of IBC and amend , abide the changing scenarios and laws.
Responsibility of insolvency and bankruptcy board of India
The IBBI’s essential duty is to make and change laws identifying with reorganization and also indebtedness goals of corporate people, association firms and people in a bound period. Up until this point, the IBBI has delivered three arrangements of controls. These incorporate – regulations for Insolvency Professionals, Insolvency Agencies and Model Bye-Laws and Governing Board of Insolvency Professional Agencies. The term corporate person will include any company incorporated under the Companies Act, 2013 and also limited liability partnership or any other person incorporated with the limited liability. It will not include any type of financial service provider. It is Limited only to the companies.
An insolvency professional is hired by the companies or individuals to manage their finances and arrange that they do not fall into trouble of insolvency. Any individual or company can fall into the trouble of insolvency for various reasons. It is governed as per the code of the insolvency and bankruptcy code of 2016. Any person can become an Insolvency professional by an application to the board when he has the minimum qualification and required experience. An insolvency firm can be also operated by such professionals.
Powers and functions of insolvency and bankruptcy board of India
- Administer the functioning of insolvency regime in the country.
- Registration of insolvency professional’s agencies.
- Create and renew information utilities.
- Forms rules and eligibility requirements for insolvency agencies.
- Levy fees from agencies and insolvency professionals.
- Controls the proper functioning and abiding by the laws of the country.
- Ensures to get the maximum gain from debtor’s assets to pay off loans to the creditors.
- They are responsible to carry out audits and inspections on debtor’s assets and creditor’s claims.
- Form communities as may be required.
- Promote transparency in functioning and amongst stakeholders.
- Section 196 of Insolvency and bankruptcy code 2016, deals with the functions and powers of the board.
Organizational structure of Insolvency and bankruptcy board of India
Basically it is a ten member board, including the chairperson.
The structure of Insolvency Bankruptcy Board of India is-
- One chairperson,
- 3 members of central government. These officers should be below the rank of joint secretary or must be of equivalent position.
- One member who is nominated by the Reserve Bank of India (RBI).
- Five members who are nominated by the central government. Out of these five, at least 3 should be full time members.
- More than half of the directors of insolvency and bankruptcy board of India should be independent directors.
Committees formed on insolvency
There are various committees formed on insolvency, some of them are given below-
- Tiwari committee- it was formed with the objective of industrial sickness’ remedial measures. As there was loss of employment happening, loss in production and government revenue, it was formed to overcome these challenges.
- N L Mitra Committee- it was formed with the objective of international financial standards and code, which was setup by governor of India to identify and develop global standards and codes related to various financial system. This committee came up with the idea of bankruptcy laws and also NCLT- National company law tribunal, where the cases related to the companies will be argued before NCLT tribunal.
- J. J. Irani expert committee on company law- It was set up by the government with objective to develop and improvise various laws related to companies Act, 2013.
- Banking laws reform committee- It was for the ministry of finance, this committee submitted its objectives to the ministry of finance and they were-
- Lesser time involved for the procedures related to bankruptcy and company law cases.
- Lesser loss of recovery,
- High levels of debt financing across instruments.
- Insolvency and bankruptcy resolution- This is a report which outlines the procedure for insolvency resolution for companies as well as individuals.
Insolvency and bankruptcy board of India was established with a view to overcome such debts and losses and make laws on this insolvency for companies and individuals. It a very recent development. There were various committees also formed in lieu of insolvency- which have proposed various idea and they are being implemented. The insolvency and bankruptcy board of India consists of a ten member board, who checks for all the loans, insolvency professionals, etc.
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