Insolvency Professionals as Administrators

In a unique kind of collaboration between two regulators, SEBI and IBBI have agreed to use the service of Insolvency Professionals to act as Administrators to enforce the SEBI regulation passed in 2018 called as Securities and Exchange Board of India (Appointment of Administrator and Procedure for Refunding to the Investors) Regulations, 2018.

The brief role that the Administrator will play under these SEBI regulations are as under:

a. appointment of Administrator pursuant to failure to comply with disgorgement or refund orders passed by the Board;
b. sale of properties attached by the Recovery Officer of the Board under the Act;
c. collection of claim documents and verification of claims of investors for the purpose of effecting refunds;
d. refund of monies to the investors pursuant to disgorgement or refund orders passed by the Board;
e. recovery of disgorgement amounts directed by the Board;
f. any act incidental or connected thereto.

These are very wide powers given to Administrators under the regulations.

The brief gist of IBBI guideline for appointing Insolvency Professionals as Administrators are as under:

The IBBI and the SEBI have mutually agreed upon to use a Panel of IPs for appointment as Administrators for effective implementation of the Regulations. The IBBI shall prepare a Panel of IPs keeping in view the requirements of SEBI and the Regulations and the SEBIshall appoint
the IPs from the Panel as Administrators, as per its requirement in accordance with the Regulations. A Panel shall be valid for six months and a new Panel will replace the earlier Panel every six months. For example, the first panel under these Guidelines will be valid for appointments during April – September, 2020, the next panel will be valid for appointments
during October, 2020 – March, 2021 and so on.

  1. An IP will be eligible to be included in the Panel of the IPs if there is no disciplinary proceeding, whether initiated by the IBBI or the IPA of which he is a member, pending against him;
    b) he has not been convicted at any time in the last three years by a court of competent jurisdiction;
    c) he expresses his interest to be included in the Panel for the relevant period; and
    d) he undertakes to discharge the responsibility as an Administrator, as and when he may be appointed by the SEBI.
    e) he has made the compliance under Regulation 7(2) (ca) of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 for the year 2019-20.
    f) he holds an Authorisation for Assignment (AFA), which is valid on the date of expression of interest.

There are other conditions such as:

. It must be explicitly understood that an IP, who is included in the Panel based on his expression of interest, must not:
(a) withdraw his interest to act as an Administrator; or
(b) decline to act as Administrator, if appointed by SEBI; or
(c) surrender his registration to the IBBI or membership or AFA to his IPA; during the validity of the Panel; or

  1. It must also be explicitly understood that:
    a) an IP in the Panel will be appointed as Administrator, at the sole discretion of SEBI;
    b) the submission of expression of interest in accordance with these guidelines, is an unconditional consent by the IP to act as Administrator in accordance with the Regulations; and
    c) an IP who declines to act as Administrator, on being appointed by SEBI, shall not be included in the Panel for the next five years, without prejudice to any other action that may be taken by the IBBI.

The relevant IBBI notification can be found on the IBBI site

The relevant SEBI guidelines can be found here

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