Know all about Authorised Representative under IBC, 2016

1. KNOW ALL ABOUT AUTHORISED REPRESENTATIVE UNDER IBC,2016 • https://taxguru.in/corporate-law/authorised-representative-ibc-2016.html • Know all about Authorised Representative under Insolvency and Bankruptcy Code, 2016 (IBC,2016): • AuthorisedRepresentative • The amendment introduced in the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 promulgated on 6 June 2018. Vide this amendment new concept has been introduced i.e. appointment of Authorised Representative for ‘class ofcreditors’. • Definition of class ofcreditors: • As per Regulation-2(1) (aa) of IBBI (CIRP) Regulations, 2016: class of creditors means a class with at least ten financial creditors under clause (b) of sub-section (6A) of section 21 and the expression, “creditors in a class” shall be construedaccordingly. • The class of creditors does not mean but includes home-buyers or real estate buyers or deposit holders. Class of creditors is a group of 10 or more financial creditors other than banks and financial institutions or trustees in financial securities ordeposits. • Various types of class ofcreditors: • Home Buyers/Real estateallottees; • DepositHolders; • Debenture Holders;etc • Appointment of AuthorisedRepresentative • Section 21 (6A) (b) of the Code read with regulation 16A of the CIRP Regulation provide that where the corporate debtor has at least ten financial creditors in a class, the Interim Resolution Professional shall offer a choice of three insolvency professionals and a creditor in the class may indicate its choice of an insolvency professional, from amongst the three, to act as its authorisedrepresentative. • The insolvency professional, who is the choice of the highest number of creditors in the class, is appointed as the authorised representative of the creditors of the respectiveclass. • Choice of Authorised Representative [Reg.-4A of IBBI (Corporate Insolvency Resolution Process Regulations,2016]

2. On an examination of books of account and other relevant records of the corporate debtor, the interim resolution professional shall ascertain class(s) of creditors, if any. For representation of creditors in a class, the interim resolution professional shall identify three insolvency professionals whoare- • not his relatives or relatedparties; • eligible to be insolvency professionals under regulation 3;and • willing to act as authorised representative of creditors in theclass. • The interim resolution professional shall obtain the consent of each insolvency professional identified as above to act as the authorised representative of creditors in the class in Form AB of theSchedule. • Process for appointing AuthorisedRepresentative: • As per clause (b) sub-section (6A) of Section 21, where a financial debt is owed to a class of creditors exceeding the number as may be specified, other than the creditors covered under clause (a) or sub-section (6), the interim resolution professional shall make an application to the Adjudicating Authority (NCLT) along with the list of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professional, to act as their authorised representative, who shall be appointed by the Adjudicating Authorityprior to the first meeting of the committee of creditors and such authorised representative shall attend the meetings of the committee of creditors, and vote on behalf of each financial creditor in class to the extent of his votingshare. • Other provisions relating to AuthorisedRepresentative: • The interim resolution professional shall select the insolvency professional, who is the choice of the highest number of financial creditors in the class in Form CA received under sub-regulation (1) of regulation 12(claim received on or before the last date mentioned in the public announcement), to act as the authorised representative of the creditors of the respectiveclass. • The choice for an insolvency professional to act as authorised representative in Form CA received under sub-regulation (2) [claim received after the time stipulated in the public announcement] of regulation 12 shall not beconsidered. • The interim resolution professional shall apply to the Adjudicating Authority for appointment of the authorised representatives within two days of the verification of claims received under sub-regulation (1) of regulation 12. Any delay in appointment of the authorised representative for any class of creditors shall not affect the validity of any decision taken by thecommittee. • The interim resolution professional shall provide the list of creditors in each class to the respective authorised representative appointed by the Adjudicating Authority. The interim resolution professional or the resolution professional, as the case may be, shall provide an updated list of creditors in each class to the respective authorised representative as and when the list isupdated. • The authorised representative shall have no role in receipt or verification of claims of creditors of the class herepresents. • The interim resolution professional or the resolution professional, as the case may be, shall provide electronic means of communication between the authorised representative and the creditors in theclass. • Remuneration [Sec. 21(6B) of the IBCode]

3. The remuneration payable to the authorisedrepresentative- • under clauses (a) and (c) of sub-section (6A), if any, shall be as per the terms of the financial debt orthe relevant documentation;and • under clause (b) of sub-section (6A) shall be as specified which shall be jointly borne by the financial creditors. • Voting in respect to AuthorisedRepresentative • Sec. 21 (7) of the IB Code,2016: The Board may specify the manner of voting and the determining of the voting share in respect of financial debts covered under sub-sections (6) and(6A). • A financial creditor or the authorised representative of the financial creditor, if it is a related party of the corporate debtor, shall not have any right of representation, participation or voting in a meeting of the committee of creditors. However, this condition is not apply to a financial creditor, regulated by a financial sector regulator, if it is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares or completion of such transactions as may be prescribed, prior to the insolvency commencementdate. • The authorised representative shall cast his vote in respect of each financial creditor or on behalf of all financial creditors he represents in accordance with the provisions of sub-section (3) or sub-section (3A) of section 25A, as the case may be. The voting share of a creditor in a class shall be in proportion to the financial debt which includes an interest at the rate of eight per cent per annum unless a different rate has been agreed to between the parties. The authorised representative shall circulate the agenda to creditors in a class and announce the voting window at least twenty-four hours before the window opens for voting instructions and keep the voting window open for at least twelvehours. • Rights and duties of authorised representative of financialcreditors • The authorised representative under sub-section (6) or sub-section (6A) of section 21 or sub-section (5) of section 24 shall have the right to participate and vote in meetings of the committee of creditors on behalf of the financial creditor he represents in accordance with the prior voting instructions of such creditors obtained through physical or electronicmeans. • It shall be the duty of the authorised representative to circulate the agenda of the meeting of the committee of creditors to the financial creditor he represents. It shall be the duty of the authorised representative to circulate the minutes of the meeting of the committee of creditors to the financial creditor herepresents. • The authorised representative shall not act against the interest of the financial creditor he represents and shall always act in accordance with their priorinstructions: • Provided that if the authorised representative represents several financial creditors, then he shall cast his vote in respect of each financial creditor in accordance with instructions received from each financial creditor, to the extent of his votingshare: • Provided further that if any financial creditor does not give prior instructions through physical or electronic means, the authorised representative shall abstain from voting on behalf of suchcreditor.

4. Notwithstanding anything to the contrary contained in sub-section (3), the authorised representative under sub-section (6A) of section 21 shall cast his vote on behalf of all the financial creditors herepresents in accordance with the decision taken by a vote of more than fifty per cent. of the voting share of the financial creditors he represents, who have cast theirvote: Provided that for a vote to be cast in respect of an application under section 12A, the authorised representative shall cast his vote in accordance with the provisions of sub-section(3). The authorised representative shall file with the committee of creditors any instructions received byway of physical or electronic means, from the financial creditor he represents, for voting inaccordance therewith, to ensure that the appropriate voting instructions of the financial creditor he represents is correctly recorded by the interim resolution professional or resolution professional, as the case maybe. Explanation. – For the purposes of this section, the “electronic means” shall be such as may bespecified. 9. Fee for attending themeetings The authorised representative of creditors in a class shall be entitled to receive fee for every meeting of the committee attended by him in the following manner,namely: