The Insolvency and Bankruptcy Board of India (IBBI) has notified the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2016. These Regulations envisage for voluntary liquidation of a body corporate.

As per these Regulations, body corporate includes the following: –

1. A company incorporated under the Companies Act, 2013 or any other previous Companies Act.
2. Limited Liability Partnerships.
3. Any other persons incorporated with limited liability.

Further these Regulations provide that any corporate body may initiate a voluntary liquidation process, provided majority of designated partners or directors, as the case may be, furnish a declaration to the effect that:-

1. There is no debt on the corporate, and if there is any, it will be able to pay such debt in full.
2. Such liquidation is not to defraud any person.

If the liquidator is of the opinion that the liquidation is proposed to defraud any persons, he shall make an application to the Adjudicating Authority, and hence liquidation shall be suspended.

Further these Regulations provide for 2 main prohibitions. These are:

1. That the Insolvency Professional must not act as liquidator of the corporate person if he is not independent of the corporate person.
2. The partners or directors of the Insolvency Professional Entity of which the Insolvency Professional is a partner or director shall not represent other stakeholders in the same liquidation process.

Thus, the liquidator and the professional(s) assisting him in liquidation are required to make continuing disclosures in respect of personal or pecuniary relationship with any of the stakeholders or the corporate person.

These Regulations require the liquidator to preserve a physical or electronic record of all the proceedings for at least eight years after the dissolution of the corporate person either with himself or with an information utility.