IBBI invites comments to amend IUs Regulations
Published: Aug 18, 2017
By TIOLCORPLAW News Service
NEW DELHI, AUG 18, 2017: THE Insolvency and Bankruptcy Board of India (IBBI) has invited comments on amendments to the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017. The IBBI had notified the said Regulations on March 31, 2017. The comments can be sent by September 6, 2017. The IBBI has received certain suggestions, both formally and informally, seeking a review of certain aspects of the regulations. It has also perused regulatory framework governing similar facilities in financial markets, such as, credit information companies, securities depositories, credit rating agencies, etc. On a review, the Governing Board of the IBBI, in its meeting on 22nd July, 2017, decided to continue with the extant regulations except for few matters. It felt that the norms of foreign holding in an IU needs to be provided under the FDI Policy / FEMA, which provides for such norms for credit information companies, market infrastructure institutions, credit rating agencies, etc. and not in the regulations under the Code. Consequently, regulations 3(e) and (f) may be deleted from the regulations. 4.
The Governing Board has advised that the public comments may be invited on the following changes for its consideration:
(a) Irrespective of foreign holding norms, at least 50% of directors of the Board of an IU may be Indian nationals and resident Indians.
(b) Regulation 8 (2) may allow a person - Indian or foreign - to hold up to 51% of the paid up equity share capital or total voting power of an IU up to three years. However, if that person is well-diversified, it may be allowed to hold up to 100%.
Information Utilities (IUs) constitute one of a key pillar of the institutional infrastructure under the Insolvency and Bankruptcy Code, 2016 (Code).The other three pillars are National Company Law Tribunal and Debt Recovery Tribunal, Insolvency and Bankruptcy Board of India (IBBI) and Insolvency Professionals. The IUs facilitate determination of defaults, claims, etc. and helps in closure of transactions in a time bound manner. IBBI (Information Utilities) Regulations, 2017 provide for a framework for registration and regulation of IUs. The regulations enable the IBBI to lay down Technical Standards, through guidelines, for the performance of core services and other services by IUs.
