Sections 203 to 205 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Three short sections describe how a registered insolvency professional agency is organised and what it does. Section 203 lets the Insolvency and Bankruptcy Board of India (the Board) make regulations on the agency's governing board. Section 204 lists seven functions the agency "shall perform". Section 205 requires the agency to make bye-laws, with the Board's approval, consistent with the model bye-laws. This article follows the IBBI consolidated text of the Code amended up to 12 August 2021.
Section 203 is a regulation-making power: the Board may specify a governing board for each agency, a minimum number of independent members, and the number of insolvency professionals who sit on it. Section 204 gives the agency seven functions, from granting membership to publishing information. Section 205 makes it make bye-laws consistent with the Board's model bye-laws, after getting the Board's approval. The three sections sit together because the agency is the first gate to practice as an insolvency professional.
Section 203: the governing board of an agency
The Board "may, for the purposes of ensuring that every insolvency professional agency takes into account the objectives sought to be achieved under this Code, make regulations to specify" three things:
- (a) "the setting up of a governing board of an insolvency professional agency";
- (b) "the minimum number of independent members to be on the governing board of the insolvency professional agency"; and
- (c) "the number of the insolvency professionals being its members who shall be on the governing board of the insolvency professional agency".
The section does not itself fix a number of members, independent members or insolvency professionals. It leaves each to regulations. Section 240(2)(zzg) refers to "the setting up of a governing board for its internal governance and management under clause (e)" of section 196, which is the Board's own function relating to the agencies. What has been specified is not in the texts consulted; check the regulations in force. A body that is setting up its board can test the structure against section 203 in a legal consultation.
Section 204: seven functions
"An insolvency professional agency shall perform the following functions, namely":
| Clause | Function (as printed) |
|---|---|
| (a) | grant membership to persons who fulfil all requirements set out in its bye-laws on payment of membership fee |
| (b) | lay down standards of professional conduct for its members |
| (c) | monitor the performance of its members |
| (d) | safeguard the rights, privileges and interests of insolvency professionals who are its members |
| (e) | suspend or cancel the membership of insolvency professionals who are its members on the grounds set out in its bye-laws |
| (f) | redress the grievances of consumers against insolvency professionals who are its members |
| (g) | publish information about its functions, list of its members, performance of its members and such other information as may be specified by regulations |
Reading the list by theme gives four groups.
- Entry. Clause (a) is the point of enrolment. Membership goes to persons who fulfil all the requirements in the agency's bye-laws and pay the membership fee. Section 206 (see article 124) makes that membership a precondition for rendering services as an insolvency professional.
- Conduct and supervision. Clauses (b) and (c): the agency lays down standards of professional conduct and monitors members' performance. The statutory code of conduct that binds every insolvency professional sits in section 208(2); our post on section 208 covers it, and this article does not repeat it.
- Protection and discipline. Clause (d) speaks of safeguarding members' rights, privileges and interests; clause (e) allows suspension or cancellation of membership, but only "on the grounds set out in its bye-laws". The grounds therefore come from the bye-laws, not from section 204.
- Service and transparency. Clause (f) charges the agency with redressing the grievances of "consumers" against its members; the text uses that word and does not define it. Clause (g) requires publication of information about the agency's functions, its list of members and their performance, plus "such other information as may be specified by regulations". Section 240(2)(zze) is the matching power: "the other information under clause (g) of section 204".
Example (invented). A resolution professional enrolled with Harbour Insolvency Forum is accused by a supplier of neglecting records. Clause (f) puts the grievance on the agency's table; clause (c) lets the agency look at the member's performance; clause (e) allows it to suspend or cancel membership only if the agency's own bye-laws provide that ground. Whether the supplier can also complain to the Board is the subject of section 217 (see article 128).
Section 205: bye-laws and the model bye-laws
"Subject to the provisions of this Code and any rules or regulations made thereunder and after obtaining the approval of the Board, every insolvency professional agency shall make bye-laws consistent with the model bye-laws specified by the Board under sub-section (2) of section 196."
Three conditions are packed into that sentence:
- the bye-laws must be subject to the Code and any rules or regulations made under it;
- the agency must obtain the approval of the Board first;
- the bye-laws must be consistent with the model bye-laws that the Board specifies under section 196(2).
Because clauses (a) and (e) of section 204 rely on "its bye-laws", the content of an agency's bye-laws decides who becomes a member and when membership ends. A reader who wants to know a particular agency's grounds for cancelling membership has to read that agency's approved bye-laws; the Code does not list them.
Rules and regulations
The set that implements these sections is the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016; the copy consulted is amended up to 13-05-2026. The date of that copy does not show that any provision of the Amendment Act, 2026 is in force.
The Amendment Act, 2026
The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026) does not amend sections 203, 204 or 205. It inserts a definition of "service provider" in section 3 that includes an insolvency professional agency, and it amends section 196, which this article does not explain. The Amendment Act, 2026 comes into force on the date or dates the Central Government notifies; the notification is not in the texts consulted, so check whether this change has been notified.
Amendments and notifications made after 12 August 2021, other than the Amendment Act, 2026, are not in the texts consulted and should be checked.
Need help with agency functions or bye-laws?
Members, applicants and complainants often need to read an agency's bye-laws against these three sections before taking a step. We can go through the position with you in a legal consultation, starting from the text of the sections and the bye-laws you hold.
Key takeaways
- Section 203 leaves the governing board, the minimum independent members and the number of insolvency professionals on it to regulations.
- Section 204 gives every agency seven functions, from granting membership to publishing information.
- Membership can be suspended or cancelled only on the grounds in the agency's bye-laws.
- Section 205 requires the Board's approval of bye-laws and consistency with the model bye-laws under section 196(2).
- Clause (f) of section 204 speaks of the grievances of "consumers"; the text does not define the word.
Read next
- Sections 199 and 200: certificate of registration and principles for registering agencies
- Sections 201 and 202: registration of an insolvency professional agency and appeal
- Sections 206 and 207: enrolment and registration of insolvency professionals
- Section 208: the statutory code of conduct for every insolvency professional
Disclaimer: Based on the IBBI consolidated text of the Insolvency and Bankruptcy Code, 2016 amended up to 12 August 2021 and on the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026), which comes into force on the date or dates notified by the Central Government, as consulted on 2 October 2026. It explains the words of the statute only; commencement notifications, other amendments made after 12 August 2021, notified thresholds, the rules and IBBI regulations, and the way tribunals and courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.