On February 14, 2017, the Insolvency and Bankruptcy Board of India (IBBI) has published draft Regulations applicable to the voluntary liquidation of corporate persons under Part II of the Insolvency and Bankruptcy Code, 2016 (IBC).
Section 59 of the IBC mandates a corporate person to meet such conditions and procedural requirements as may be specified by IBBI. A “corporate person” includes any company incorporated under the Companies Act, 2013, LLP incorporated under the Limited Liability Partnership Act, 2008 or any other person incorporated with limited liability under any law excluding a financial service provider. A corporate person other than a company, through its designated partners or any other persons responsible for exercising its corporate powers, shall be required to submit a declaration accompanied by an affidavit to initiate the process of voluntary liquidation.
Within four weeks of the declaration, a resolution would require to be passed to give effect to the commencement of the process of liquidation as well as the appointment of an insolvency professional. A corporate person shall cease to carry on its business from the date of passing of the aforesaid resolution (which shall be deemed to be the date of commencement of voluntary liquidation). The liquidator is required to make best endeavors to complete the liquidation process within one year from commencement of voluntary liquidation.