The Hon’ble Finance Minister of India in budget speech for the Year 2022-2023 has laid down the foundation for digitalised economy along with Ease of Doing business 2.0 which emphasize on easy entry and exit to market players, integration of centre & states level systems and removal of overlapping compliances. With the introduction of many Information Technology (IT) based systems aiming to give ease to new entrepreneur to foster the registration process of companies in a simplified manner, the government has also felt the need of establishing a mechanism to accelerate the process of corporate exits through Voluntary Liquidation. In order to ease down the procedure of corporate exits the government has introduced the establishment of C-PACE (Centre for Processing Accelerated Exit) which will speed up the whole process of voluntary winding up which is one of the most viable options adopted for closing down the business
In order to keep up the pace with the visions and missions of government and to provide easy exits to corporate, the Insolvency and Bankruptcy Board of India (IBBI) has notified the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment) Regulations, 2022 (Amendment Regulations) on 05th April, 2022 and amended the existing IBBI (Voluntary Liquidation Process) Regulations, 2017 by reducing various timelines under the process, keeping in view the extent of complexity involved in the process of voluntary liquidation.
We have highlighted the amendments in the IBBI (Voluntary Liquidation Process) Regulations, 2017
KEY HIGHLIGHTS OF IBBI (VOLUNTARY LIQUIDATION PROCESS) (AMENDMENT) REGULATIONS, 2022
|S.No.||Particulars||Old Provision||New Provision|
Appointment of Liquidator
|The liquidator shall within 3 days of his appointment as liquidator, intimate the board about his appointment||The liquidator shall within 7 days of his appointment as liquidator, intimate the board about his appointment|
List of stakeholders
|The liquidator shall prepare the list of stakeholders within 45 days from the last date of receipt of claims||The liquidator shall prepare the list of stakeholders within 45 days from the last date of receipt of claims.
Provided that where no claim from creditors has been received till the last date for receipt of claims, the liquidator shall prepare the list of stakeholders within fifteen days from the last date for receipt of claims.
|The liquidator shall distribute the proceeds from realization within six months from the receipt of the amount to the stakeholders||The liquidator shall distribute the proceeds from realization within 30 days from the receipt of the amount to the stakeholders|
Completion of liquidation
|(1) The liquidator shall endeavour to complete the liquidation process of the corporate person within twelve months from the liquidation commencement date||(1) The liquidator shall endeavour to complete the liquidation process and submit the final report within-
(a) two hundred and seventy days from the liquidation commencement date where the creditors have approved the resolution for initiation of voluntary liquidation
(b) ninety days from the liquidation commencement date in all other cases
|(3) The liquidator shall submit the Final Report to the Adjudicating Authority along with the application under section 59(7)||(3) The liquidator shall submit the Final Report and the compliance certificate in Form-H along with the application under sub-section (7) of section 59 to the Adjudicating Authority|
These steps are in right direction for efficient and timely completion of Voluntary Liquidation process which are welcome and we believe that steps should also be taken for aligning all governmental authorities/ departments like Registrar of Companies (ROC), Income Tax Department, GST Department etc for these timelines for efficient completion of approval of forms, completion of proceedings, assessments, refunds and surrendering of registrations as may be required for completion of the liquidation.
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Insightful and helpful article!