Thursday, December 2, 2021
HomeIBCIBC- Hefty Monetary Penalties to be imposed by an IP Agency

IBC- Hefty Monetary Penalties to be imposed by an IP Agency

The Insolvency and Bankruptcy Board of India (IBBI) vide circular no. No. IBBI/IPA/43/2021 dated 28th day of July 2021, has issued circular on the topic “Monetary Penalties to be imposed by an Insolvency Professional Agency” in the exercise of powers under section 196 of the Insolvency and Bankruptcy Code, 2016.

IBBI’s move seeks to ensure insolvency professionals remain compliant with the letter and spirit of IBC and conduct themselves ethically.

  • Applicability: With immediate effect i.e. 28th day of July 2021.

Key Highlights:

The Disciplinary Committee of an Insolvency Professional Agency (IPA) may impose monetary penalty on its professional members under Clause 24(2)(d) of the Schedule to the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016.

In the interest of objectivity and uniformity, it has been decided that an IPA shall amend its Bye-laws to provide for the maximum and minimum monetary penalty, where the Disciplinary Committee decides to impose such penalty on its professional members, under Clause 24(2)(d) of the Schedule to the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016, as under:

Sl. Contravention Monetary Penalty
1. Fails to submit disclosures, returns, etc. to IPAs or submits inadequate or incorrect disclosures, returns, etc., relating to any assignment, as required under the Code and Regulations made

thereunder or Bye-laws of the IPA or called upon by the Board or the IPA.

Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000.
2. Accepts an assignment having conflict ofinterests with the stakeholders. Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
3. Fails to maintain records properly relating to any of his assignments. Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000.
4. Rejects a claim(s) without giving any proper reason while undertaking an assignment or fails to exercise due diligence in claim verification. Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
5. Fails to comply with directions issued by

Adjudicating Authority or the Appellant Tribunal.

Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
6. Outsources his duties and obligations. Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
7. Fails to appoint registered valuers, wherever

required, under the Code or Regulations made thereunder, for conducting valuation.

Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
8. Fails to supply the information called for or to comply with the requirements of information sought by the IPA, Board, Adjudicating Authority or the Appellant Tribunal or does not cooperate with the inspection or investigating

authority.

Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000.
9. Fails to make public announcement in the manner provided for in the relevant Regulations. Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
10. Fails to provide notice regarding meetings of

creditors.

Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000.
11. Fails to reject resolution plan from ineligible

resolution applicants.

Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
12. Fails to take action in respect of Preferential, Undervalued, Fraudulent or Extortionate transactions. Up to ₹ 2,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 1,00,000.
13. Enters into contract or agreement with professionals in an incomplete and improper manner. Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000.
14. Contravenes any provision of the Bye-laws, or Regulations for which no specific penalty has

been provided.

Up to ₹ 1,00,000 or 25% of fee, whichever is higher, subject to a minimum ₹ 50,000.”

Source: Circular no. IBBI/IPA/43/2021

Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.

 

TaxClue Teamhttp://taxclue.in
Taxclue is an online news portal for reporting all news, articles, judgments, Circulars, orders, and notifications relating to various corporate and tax laws in India. We use the tagline ‘Simplifying Laws’. Our mission is to Simplify the Laws and make people aware of their rights and duties in relation to tax matters in order to equip them to participate in nation-building.

Leave a Reply

Follow Us

2,057FansLike
924FollowersFollow
52FollowersFollow
spot_img

Recent Posts

PLI

PLI scheme for the Pharmaceutical Sector

0
“Worth Rs 15, 000 crore incentives for Pharma Industry” A Production-Linked Incentive, or PLI scheme, provides incentives in the form of tax rebates, import and...
Income tax

All you need to know about the new annual information statement (AIS)

0
The income-tax department has rolled out the new Annual Information Statement (AIS) in the Compliance section of the Income-tax portal, with the aim of...
Tax Return

Don’t skip this step to avoid rejection of your tax refund Filling ITR

0
 If you pay more tax than she is liable for in a financial year through excess tax deducted at source (TDS) or miscalculation in...
ITR

ITR filing process ends with receipt of intimation notice under section 143(1) – Here’s...

0
Many taxpayers are of the opinion that the process of filing income tax return (ITR) ends once they verify their tax returns. However, actually,...
Income tax

Income Tax e-settlement scheme, 2021 – Overview

0
The Board of Direct Taxes (Income Tax Department) vide Notification No. 129/2021/ F.No. 370142/52/2021-TPL (Part IV) dated 01.11.2021, in exercise of its power under...

Most Popular

%d bloggers like this: