Clarification on concerns of Practicing Company Secretaries, who are registered as Insolvency Professionals, to form Insolvency Professional Entity
Q.1 Can a Company Secretary, who is registered as an Insolvency Professional, be appointed as partner/designated partner of a partnership firm/LLP which is recognized as an Insolvency Professional Entity?
A.1 Regulation 168(2) of the Company Secretaries Regulations, 1982 permits a Practicing Company Secretary to perform activities of an Insolvency Professional upon appointment by a Court of Law/Tribunal and thus, there is no prohibition for a Company Secretary, who is registered as an Insolvency Professional, to be appointed as partner/designated partner of a partnership firm/LLP which is recognized as an Insolvency Professional Entity.
Q.2 Can an existing registered partnership firm/LLP of Company Secretaries having majority of registered partners/designated partners as insolvency professionals apply to IBBI for recognition as an Insolvency Professionals Entity?
A.2 Yes, an existing registered partnership firm/LLP of Company Secretaries having majority of registered partners/designated partners as insolvency professionals apply to IBBI for recognition as an Insolvency Professionals Entity.
Q.3 Whether such an Entity, formed by way a partnership firm/LLP of Company Secretaries having majority of registered partners/designated partners as insolvency professionals, perform/carry out attestation services also in the same entity along with IP activities?
A.3 Yes, such an entity, formed by way a partnership firm/LLP of Company Secretaries having majority of registered partners/designated partners as insolvency professionals, can perform/carry out attestation services also in the same entity along with IP activities, subject to the provisions of the Insolvency and Bankruptcy Code, 2016 and various regulations, as may be notified by IBBI from time to time.
Q.4 Can a Company Secretary, who is registered as an Insolvency Professional, be appointed as a Whole-Time Director of a company, which is recognized as an Insolvency Professional Entity?
A.4 In view of the Resolution dated 28th July, 2017 passed by the Council of ICSI, a Company Secretary, who is registered as an Insolvency Professional can be appointed as a Whole-Time Director of a company which is recognized as an Insolvency Professional Entity by the Insolvency and Bankruptcy Board of India and to hold any amount of share in such an entity. However, the object clause of such an Insolvency Professional Entity shall pertain only to the activities that are complementary/ ancillary to the work of insolvency and that such a PCS, who would be a Whole-Time Director, would not be allowed to carry out any other activity or attestation services through such an IPE.
Q.5 Whether formation of IPEs is permitted resulting in Multi Disciplinary Partnership where a Practicing Company Secretary is also a partner?
A.5 A reading of the Company Secretaries Act, 1980, Company Secretaries Regulations, 1982 and the resolution passed by the Council in 232nd Meeting held on 20th December, 2015 indicates that Multi-Disciplinary Partnership is permitted subject to the provisions of/resolutions passed by other statutory bodies governing such other professionals.
Q.6 Can an Insolvency Professional Entity, formed by way of a company, perform attestation services?
A.6 No, an Insolvency Professional Entity, formed by way of a company, cannot perform attestation or any other services.
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