Insolvency and Bankruptcy Board of India on 7th June 2023 has issued a Discussion Paper on Simplification of Enrolment and Registration Process for Ease of Entry in the Insolvency Profession. The current regulatory framework involves the Insolvency Professional Agency (IPA) as the frontline regulator for enrolling professional members, while the Insolvency and Bankruptcy Board of India (IBBI) grants the certificate of registration to enable Insolvency Professionals (IPs) to take assignments under the Code. This discussion paper aims to simplify the enrolment and registration process by addressing duplicity and streamlining the exit and compliance obligations associated with the insolvency profession.
Simplification of Entry Requirements
The existing regulations require individuals to pass the Limited Insolvency Examination (LIE) and complete the Pre-Registration Educational Course (PREC) before applying for enrolment and registration. However, the paper suggests modifying these requirements to enhance practical exposure and ensure up-to-date knowledge. The proposal suggests conducting the PREC after enrolment but before applying for registration, with a course assessment exam at the end. This practical-oriented course, followed by an assessment examination, will better evaluate applicants’ practical experience and ensure their readiness for registration.
Conduct of PREC
To standardize the delivery of PREC, the paper proposes conducting the course through specialized institutions or agencies designated by the IBBI. This approach will ensure uniformity, focused delivery, and qualitative practical training for professional members. IPAs will continue to support these institutions in imparting training to the professional members.
Simplification of Enrolment and Registration Process
The current process requires applicants to apply separately for enrolment with the IPA and registration with the IBBI, leading to duplication of efforts. The paper proposes a straight-through approach, allowing applicants to submit a unified application form for both enrolment and registration. The IPA will communicate the acceptance or rejection of the application within 60 days, and if accepted, issue a certificate of membership. To obtain registration as an IP, the professional member must complete the PREC and pay a non-refundable application fee to the IBBI within 12 months. The IPA will then verify and forward the application to the IBBI, which will process it according to existing regulations. This streamlined process will reduce duplication and expedite the enrolment and registration procedures.
Exit from Professions and Streamlining Compliance
The paper identifies the need to address compliance obligations and procedures related to various exit scenarios, such as suspension, surrender, expulsion, or demise of an IP. It highlights the absence of explicit provisions in the regulations regarding the impact of suspension or surrender on registration and related compliances. The paper emphasizes the importance of specifying the consequences and verifying compliance obligations in these situations to ensure transparency and accountability.
Conclusion
Simplifying the enrolment and registration process for the insolvency profession is crucial for promoting ease of entry and maintaining the desired levels of professional acumen. By modifying the requirements, standardizing the PREC, and streamlining the enrolment and registration procedures, the proposed measures aim to enhance efficiency and effectiveness while reducing duplication and ensuring compliance. These reforms will contribute to the continued development and strengthening of the insolvency profession under the Insolvency and Bankruptcy Code, 2016.
