On August 13, 2024, in exercise of the powers conferred to it under sections 196, 217, 218, 219, 220 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (IBC), the Insolvency and Bankruptcy Board of India (IBBI)amended the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017 (Inspection and Investigation Regulations). Pertinently the said Regulations were initially established to provide a structured framework for the inspection and investigation of service providers registered with the IBBI. These Regulations outline the procedures and timelines for conducting inspections, issuing show-cause notices, and responding to such notices.
The key change brought in by way of the amendment involves extension of the timeframe for disposal of the show-cause notices, by the Disciplinary Committee, under Regulation 13(2) of the Regulations. Specifically, the amendment revises the timeline of disposal of show case notices from thirty-five (35) days thirty-five days of the date of the issuance of the show-cause notice to sixty (60) days from the due date for receipt of a reply to the show-cause notice. This extension aims to provide a more reasonable period for disposal of show cause notices during inspection and investigation processes under the IBC.
The recent amendment is designed to enhance the efficiency and fairness of these processes by allowing more time for the disciplinary committees to assess and dispose of the show cause notices issued by them thereby improving the overall quality of assessment and investigation outcomes.
By extending the response timeframe, the IBBI has acknowledged the practical challenges faced by committees in disposing off show-cause notices by way of comprehensive reasoned orders. The amendment reflects the IBBI’s commitment to fostering a balanced regulatory environment that supports both regulatory objectives and the operational realities of the mechanism it entails.