IBBI seeks Exemption from SEBI & CBDT on some rules for Insolvent Companies

CIRP Regulations - Taxscan

Since its constitution, the Insolvency and Bankruptcy Board of India has issued draft rules on the regulation of Insolvency Professionals (IPs) and insolvency professional agencies (IPAs) to handle bankruptcy issues in India.

The IBBI has reportedly requested for relaxation from commodities and capital market regulator and the I-T department on some rules basis for insolvent companies.

 The Bankruptcy Board sought an exemption in disclosure norms during the 180 days period when insolvency resolution professionals (IRP) take over a firm to turn it around. IBBI has also requested to SEBI not to take any penal action against to these companies, but can apply the same against promoters.

An IRP can be penalized under SEBI Act in case of any violation of laws by companies under the management of professional. Therefore sumit Agrawal, former SEBI official and Founder commented that providing protection to resolution professionals will be a welcome move coming from SEBI.

Since they have a very short duration of 180 days to turn around the company, it becomes very difficult for professionals to fulfill regulatory requirements. IBBI has also asked the Central Board of Direct Taxes (CBDT) to give relaxation to such companies in Minimum Alternative Tax (MAT) during the 180-days period.

The Bankruptcy board requested for exemptions in tax in order to give every possible support to the professionals who are running insolvent companies. This right move could help the resolution professionals focus on turning around the operations at an insolvent company.

The market regulator had earlier given relaxation in open offer to buyers of distressed companies. As a result of recent board meeting of distressed company, it also agreed to not take any action against such companies. So this would be considered as a great achievement and support to the professionals who are running insolvent companies.

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