Restrictions imposed on the Shareholding of Insolvency Professional Agencies
IBBI has amended the IBBI (Insolvency Professional Agencies) Regulations, 2016 and have introduced some restrictions on the shareholding of Insolvency Professional Agencies (“IPAs”), which are as follows:
- Subject to clause (b) and (c) below, no company is allowed to acquire or hold more than 5% of the paid-up equity share capital in an IPA;
- A stock exchange, a depository, a banking company, an insurance company, a public financial institution and a multilateral financial institution is allowed to acquire or hold, directly or indirectly, up to 15% of the paid-up equity share capital of an IPA; and
- The Central Government, any State Governments and statutory regulators are allowed to acquire or hold, directly or indirectly, up to 100% of the paid-up equity share capital of an IPA.
Apart from the abovementioned restrictions, the company applying for the registration as an IPA is also required to disclose the details of the persons holding more than 5% of its share capital, directly or indirectly.