The Insolvency and Bankruptcy Board of India (IBBI) has introduced new disclosure requirements for resolution applicants under the corporate insolvency resolution process. Through the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2025, notified recently , IBBI has mandated two critical inclusions in every resolution plan to be submitted under the Insolvency and Bankruptcy Code, 2016.
The amendment inserts a new sub-regulation (3A) in
Regulation 38 of the principal regulations. This new provision requires that-
“(3A) Every resolution plan shall include:
1. a
statement of beneficial-ownership, in a format to be notified through circular
by the Board, covering details of all natural persons who ultimately owns or
controls the resolution applicant, together with the shareholding structure and
jurisdiction of each intermediate entity; and
2. an
affidavit, in a format specified by the Board, that the resolution applicant is
eligible/not eligible for the benefit of section 32A”
The requirement for beneficial ownership is particularly
noteworthy as it mandates transparency through disclosure of entire ownership
structure. Resolution applicants will now need to trace and disclose the
ultimate natural persons who own or control the applicant entity, irrespective
of how many layers of intermediate entities exist. This includes providing
details of the shareholding structure and jurisdiction of each intermediate
entity in the chain.
The second requirement relates to Section 32A of the
Insolvency and Bankruptcy Code, which deals with certain persons not entitled
to submit a resolution plan. This provision bars persons who are connected with
the corporate debtor in specified relationships, as well as those classified as
wilful defaulters or disqualified directors, from submitting resolution plans
unless specifically permitted under the law. The new regulation now requires
resolution applicants to proactively declare their eligibility or ineligibility
for Section 32A benefits through an affidavit in the format to be specified by
the Board.
The above critical amendments appear to be aimed at
enhancing transparency in the corporate insolvency resolution process and
preventing circumvention of Section 32A restrictions through complex ownership
structures. By requiring disclosure of the entire beneficial ownership chain,
the IBBI is ensuring that resolution professionals, creditors, and adjudicating
authorities can properly assess whether the resolution applicant is genuinely
eligible to submit a resolution plan or whether it is a front for persons who
are otherwise barred under Section 32A.
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