The Insolvency and Bankruptcy Board of India has notified norms for information utilities, paving the way for creating entities that would act as repository of financial information to help verify defaults.
Besides, the board has notified regulations for voluntary liquidation process.
The norms for information utilities provide for a framework for registration and regulation under the Insolvency and Bankruptcy Code.
An information utility stores financial information that helps to establish defaults as well as verify claims expeditiously. Having such a system would facilitate completion of transactions under the Code in a time bound manner.
The regulations for information utilities would be effective from tomorrow, an official release said.
"In order to safeguard the interests of the user, the regulations require an information utility to have a grievance redressal policy as well as an exit management plan.
"An information utility shall also have a compliance officer who shall ensure compliance with the provisions of the Code and shall, immediately and independently, report to the IBBI any non-compliance of any provision of the Code observed by him," it noted.
A public company with a net worth of at least Rs 50 crore is eligible to set up an information utility and among other requirements, more than half of the directors of its governing board should be independent directors.
The information utility, its promoters, directors, key managerial personnel and persons holding over five per cent of its paid-up equity share capital or total voting power, would be considered as fit and proper persons.
Information utilities "constitute a key pillar of the insolvency and bankruptcy ecosystem, the other three being the Adjudicating Authority (National Company Law Tribunal and Debt Recovery Tribunal), the IBBI and Insolvency Professionals," the release said.
In another official release, IBBI said the regulations provide the process from initiation of voluntary liquidation of a corporate person - companies, limited liability partnerships and any other persons incorporated with limited liability - till its dissolution.
A corporate person may initiate a voluntary liquidation proceeding subject to various conditions, including that majority of the directors or designated partners of the corporate person make a declaration to that effect.
As per the norms, an insolvency professional is prohibited from acting as a liquidator for a corporate person if he is not independent of the entity concerned.
Further, the liquidator and professionals assisting him in liquidation are required to make disclosures -- initial and continuing - about pecuniary or personal relationship with any of the stakeholders or the corporate person, the release said.
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