India: Key Highlights Of Insolvency And Bankruptcy Board Of India (Voluntary Liquidation Process) (Amendment) Regulations, 2020

S. No.

Amended Provisions of the Voluntary Principal Regulations

Legal position prevailing before Voluntary Amendment Regulations

New legal position

1.

Regulation 2 – Definitions

Regulation 2(1) defines terms that have been used in the Voluntary Principal Regulations.

The Voluntary Amendment Regulations insert Regulation 2(1) (ba) to define "Corporate Voluntary Liquidation Account" which would be operated and maintained by IBBI under regulation 39.

2.

Regulation 10 – Registers and books of account

Regulation 10(2) imposes an obligation on the liquidator to maintain certain registers and books (as mentioned in Regulation 10(2)) in relation to the liquidation of the corporate person. Regulation 10(2)(q) pertains to the register of unclaimed dividends and undistributed properties, deposited in accordance with Regulation 39.

Regulation 10(2)(q) has been amended, thereby obligating the liquidator to now maintain the register of unclaimed dividends and undistributed proceeds.

3.

Regulation 39 – Unclaimed proceeds of liquidation or undistributed assets

Regulation 39 provides the procedure and manner of dealing with unclaimed proceeds of liquidation or undistributed assets.

Regulation 39 of the Voluntary Principal Regulations has been substituted entirely. The new Regulation 39 is titled "Corporate Voluntary Liquidation Account", an account which will be operated and maintained by IBBI.

Regulation 39(2) requires the liquidator to deposit unclaimed dividends and undistributed proceeds, if any, along with any income earned thereon till the date of deposit, into the Corporate Voluntary Liquidation Account, before filing an application before the Adjudicating Authority for dissolution of corporate person (under Section 59(7)).

A liquidator holding unclaimed dividends or undistributed proceeds, as on the date of commencement of Voluntary Amendment Regulations, is required to deposit the same within 15 days (Regulation 39(3)).

A liquidator failing to deposit the aforesaid amounts as per this regulation shall be liable to pay interest @ 12% p.a. from the due date of deposit till the date of deposit (Regulation 39(4)).

Regulation 39(7) prescribes that a stakeholder, claiming entitlement to any amount deposited into the Corporate Voluntary Liquidation Account, may apply to IBBI (in Form H) for an order of withdrawal of the said amount. The proviso thereof further states that for any other person apart from the stakeholder(s), he shall submit evidence to satisfy IBBI about his entitlement to the said amount.

Under Regulation 39(9), IBBI is required to maintain a corporate person-wise ledger of the amount deposited into and the amount withdrawn from the Corporate Voluntary Liquidation Account.

No proceeds can be withdrawn from the Corporate Voluntary Liquidation Account without the approval of the custodian thereof, nominated by IBBI (Regulation 39(10)).

Regulation 39(13) states that any amount deposited into the Corporate Voluntary Liquidation Account which remains unclaimed or undistributed for 15 years from the date of dissolution of the corporate person (along with any amount of income or interest received thereupon) shall be transferred to the Consolidated Fund of India.

9.

Form G in Schedule I

(INSERTION OF NEW FORM AFTER FORM F)

Form G pertaining to "Deposit of Unclaimed Dividends and/or Undistributed Proceeds" has been inserted due to amendments in Regulation 39 vide the Voluntary Amendment Regulations. Under the amended Regulation 39(5), this Form is required to be submitted by the liquidator to IBBI as well as the authority with which the corporate person is registered. This Form sets forth the nature of the amount deposited into the Corporate Voluntary Liquidation Account and the names and last known addresses of the stakeholders entitled to receive the unclaimed dividends or undistributed proceeds.

10.

Form H in Schedule I

(INSERTION OF NEW FORM AFTER FORM G)

Form H pertaining to "Withdrawal from Corporate Voluntary Liquidation Account" has been inserted due to amendments in Regulation 39 vide the Voluntary Amendment Regulations. Vide the amended Regulation 39(7), this Form is required to be submitted by a stakeholder claiming entitlement to any amount deposited into the Corporate Voluntary Liquidation Account, for an order of withdrawal of the said amount

11.

Distributions Register, Schedule II

Certain instructions (numbered 1 to 4) have been prescribed in the Distributions Register.

In the instruction at Sr. No. 4, the words "Public Account of India" have been substituted with "Corporate Voluntary Liquidation Account" (in light of the amendments in Regulation 39)

12.

Schedule II

Register of Unclaimed Dividends and Undistributed Assets Deposited

The word "Assets" has been substituted with "Proceeds".