2.3.12:Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016.

12. Recognition of Insolvency Professional Entities.

 A company, a registered partnership firm or a limited liability partnership may be recognised as an if –

its sole objective is to provide support services to insolvency professionals, who are its partners or directors, as the case may be;

it has a net worth of not less than one crore rupees;

 majority of its equity shares and voting rights are held by insolvency professionals, who are its directors, in case it is a company;

 majority of  its shares is held by insolvency professionals, who are its directors, in case it is a company;

  majority of capital contribution is made by insolvency professionals, who are its partners, in case it is a limited liability partnership firm or a registered partnership firm;

 majority of its partners or directors, as the case may be, are insolvency professionals;

  majority of its whole time directors are insolvency professionals, in case it is a company; and

 none of its partners or directors is a partner or a director of another insolvency professional entity:

  the insolvency professional entities recognised before the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Second Amendment) Regulations, 2021 shall comply with the provisions of clauses (b) and (c) on or before 31stDecember 2021.

Explanation.-For the purposes of clause (b) of this sub-regulation, ‘net worth’ means-

(i) the net worth as defined under section 2(57) of the Companies Act, 2013 in case of a company;

(ii) sum of partners‟ contribution in the capital account and their undistributed profits net of accumulated losses, if any, in case of a registered partnership firm or limited liability partnership.

Provided that the insolvency professional entities recognised as on the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) (Amendment) Regulations, 2018 shall comply with the provisions of clauses (a), (b) (c) and (d) on or before 30th September, 2018 and the provisions of clauses (e), (f) and (g) on or before 30th June, 2018.

12. (1) A limited liability partnership, a registered partnership firm or a company may be recognised as an insolvency professional entity if-

(a) a majority of the partners of the limited liability partnership or registered partnership firm are registered as insolvency professionals; or

(b) a majority of the whole-time directors of the company are registered as insolvency professionals, as the case may be.

 A person eligible under sub-regulation (1) may make an application for recognition as an insolvency professional entity to the Board in   of the Second Schedule along with an application fee of  fifty thousand rupees.

(2) A person eligible under sub-regulation (1) may make an application for recognition as an insolvency professional entity to the Board in of the Second Schedule to these Regulations.

The Board shall acknowledge an application made under this regulation within seven days of its receipt.

The Board may, after examination of the application,-

(i) require the applicant to submit, within reasonable time, additional documents, information or clarification;

(ii)inspect or inquire the applicant;

(iii) require any of the directors or partners of the applicant to appear, within a reasonable time, before it in person for any clarifications, as may be necessary for the purpose of considering the application