WIRC Bulletin - July 2018

How to pass Limited Insolvency Examination by CMA (Dr.) Rajkumar S. Adukia

How to pass Limited Insolvency Examination

CMA (Dr.) Rajkumar S. Adukia

Mobile: +91 98200 61049

Email: [email protected]

With the purpose of resolving disputes in time bound manner, improve credit availability, promote entrepreneurship, balance the interest of all the stakeholders and tackle around 12 old laws, the Insolvency and Bankruptcy Code, 2016, came into effect from May 28, 2016, but its sections were first notified on August 5, 2016.

The Code provides resolution to the aggrieved parties, i.e. the Financial creditors and Operational creditors when the corporate debtors do not make payments when due, in a time bound manner.  The creditors in case of non-receipt of payments of Rs. 1 lakh or more, can make application under the Code.  Even the corporate person when it feels that the assets in its possession are not sufficient to repay the liabilities, they can also make application under the Code.  The Part II of the Code also provides for liquidation of the corporate persons.

The procedures laid down under the Code are such so as to eliminate the time-consuming debt recovery process resulting in capital erosion and demotivating the investor’s confidence.  It also provides exit opportunity for the corporates, through the process of voluntary liquidation.

A separate mechanism is set up under the IBC, 2016, for the faster disbursal of cases.    The Ministry of Corporate Affairs has been entrusted with the administration of the Code.   Section 239 of the Code, empowers the central Government to make rules on the matters prescribed in the said section.

For the smooth implementation of the Code, and its efficient functioning, following authorities have been created:

  1. The Insolvency and Bankruptcy Board of India
  2. The Adjudicating Authorities
  3. Information Utility
  4. The Insolvency Professional Agency
  5. Insolvency Professionals/ Insolvency Professional Entity

The Insolvency and Bankruptcy Board of India

It is the Regulator established by the Code. It is headed by Dr. M. S. Sahoo and is headquartered in Delhi. It was constituted on October 1, 2016. Commonly termed as IBBI, it is empowered to issue regulation on matters provided u/s 240 of the Code.  The Board is also entrusted with supervision and registration of Insolvency Professional Agency, Insolvency Professionals and Information Utility.

Adjudicating Authorities

The purpose of the Code is timely resolution for debt recovery. The Code has separate Adjudicating Authority for its functioning. National Company Law Tribunal is designated for Part II of the Code dealing with Companies and LLP. Appeal against orders of NCLT may be filed in National Company Law Appellate Tribunal. Debt Recovery Tribunal is Adjudicating Authority for Part III of the Code dealing with Individual and Partnership firms. Appeals may be filed to Debt Recovery Appellate Tribunal. After that, last resort is the Supreme Court.

Information Utility

Information Utility is an organization incorporated with a purpose to store financial information of transaction relating to debt. Data can be requested during the processes of the Code. At present, National E-Governance Services Limited is registered as Information Utility under the Code.

Insolvency Professional Agency

An Insolvency Professional Agency is a collective Body of Insolvency Professionals. It shall be incorporated and registered with Board as per the provisions of the Code. At present, ICSI, ICAI and ICAI (CMA) had registered there IPA respectively.

Insolvency Professional/ Insolvency Professional Entity

Under various processes of the Code, Resolution Professional is required to be appointed for administration of corporate debtor, or, if company is in liquidation then liquidator. Insolvency Professional Entity is a group of Insolvency Professionals registered with Board. They are service provider under the Code. Insolvency Professional shall be member of Insolvency Professional Agency and shall have requisite qualification and experience. He shall also pass Limited Insolvency Examination. At present, there are 1770 Insolvency Professionals.


The limited insolvency examination are conducted by the Insolvency and Bankruptcy Board of India, under regulation 3(3) of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016.

Who can appear?

There is no minimum qualification criteria for appearing for the Limited Insolvency Examination, but in order to be registered as the Insolvency Professional with the IBBI and to practice in the field of insolvency resolution, one has to clear the Limited Insolvency Examination.

How to Register?

Registration for the examination can be done online by visiting the link mentioned under the head examinations on the IBBI website, www.ibbi.gov.in.  After filling the online form and filling of exam fees of Rs. 1500/-, admit card will be generated.  The admit card, along with PAN card and Aadhar card, is to be carried by the candidate to the examination centre.

The exams are conducted daily at more than 100 centres across the country.

Paper Pattern:

The Limited Insolvency exams are conducted online in a computer-based proctored environment.  The paper consists of 87 multiple choice questions, which carry 100 marks in total.  The duration of the paper is two hours.  Minimum passing percentage is sixty and there is negative marking of 25% of the marks assigned to the question, incorrectly answered.

Number of questions on each topic will depend upon the weightage assigned to the topic in the syllabus.

The candidates who pass the examination will be awarded a certificate by the Board.  On the submission of examination papers, a temporary marksheet will be provided.


As the purpose of conducting the exams is to equip an individual to handle the responsibilities of the company in the process of insolvency resolution, the Limited Insolvency Examination stresses on the study of the Insolvency and Bankruptcy Code, 2016 and rules and regulations thereto.

The IBC comprises of 5 parts and 261 sections (255 at the onset + 6 sections added by amendments) and 12 Schedules. (12th schedule added as per the Ordinance passed on June 6, 2018).


Part Particulars
I Preliminary
II Insolvency Resolution and Liquidation for Corporate Persons
III Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms
IV Regulation of Insolvency Professionals, Agencies and Information Utilities
V Miscellaneous



THE FIRST SCHEDULE – Amendment to the Indian Partnership Act, 1932- Section 245

THE SECOND SCHEDULE – Amendment to the Central Excise Act, 1944- Section 246

THE THIRD SCHEDULE – Amendment to the Income-Tax Act, 1961- Section 247

THE FOURTH SCHEDULE – Amendment to the Customs Act, 1962- Section 248

THE FIFTH SCHEDULE – Amendment to the Recovery of Debts Due to Banks and Financial Institutions Act, 1993- Section 249

THE SIXTH SCHEDULE – Amendment to the Finance Act, 1994- Section 250

THE SEVENTH SCHEDULE – Amendment to the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002- Section 251

THE EIGHTH SCHEDULE – Amendment to the Sick Industrial Companies (Special Provisions) Repeal Act, 2003- Section 252

THE NINTH SCHEDULE – Amendment to the Payment and Settlement Systems Act, 2007- Section 253

THE TENTH SCHEDULE – Amendment to the Limited Liability Partnership Act, 2008- Section 254

THE ELEVENTH SCHEDULE – Amendments to the Companies Act, 2013- Section 255

THE TWELFTH SCHEDULE – Acts for the purpose of Section 29A(d) (inserted by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018, effective from June 6, 2018.

Rules & Regulations

The Ministry of Corporate Affairs has notified 4 set of rules on the matters specified in section 239 of the Code and one draft rules under Part III of the Code.  Besides these, following rules are also relevant:

  1. The National Company Law Tribunal Rules, 2016 – notified on 21st July, 2016
  2. The National Company Law Appellate Tribunal Rules, 2016 – notified on 21st July, 2016
  3. The Companies (Transfer of Pending Proceedings) Rules, 2016 – notified on 7th December, 2016, w.e.f. 15th December, 2016, except rule 4 which came into effect from 1st April, 2017

Also, there are 14 different regulations notified as per the provisions of section 240 of the Code and one draft regulation relating to Part III of the Code.

The third part or part c of the syllabus deals with the related provisions of the Companies Act, 2013, the Partnership Act, 1932 and certain provisions of the Limited Liability Partnership Act, 2008.

Part D and E, which carry a weightage of 12% marks covers the following laws:

  1. The Indian Contract Act, 1872
  2. The Sale of Goods Act, 1930
  3. The Transfer of Property Act, 1882
  4. Specific Relief Act, 1963
  5. Negotiable Instruments Act, 1881
  6. The Recovery of Debts Due to Banks and Financial Institutions Act, 1993
  7. The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interests Act, 2002
  8. The Arbitration and Conciliation Act, 1996
  9. The Limitation Act, 1963 and
  10. Corporate Debt Restructuring Scheme, Strategic Debt Restructuring, and Scheme for Sustainable Structuring of Stressed Assets.

These are the general and special acts related to the insolvency resolution process and the knowledge of the same will be very helpful to the candidate who successfully clears the examination, in carrying out his duties as an Insolvency Professional.

Part F of the syllabus deals with the topics of general awareness related to economy, financial markets, rights of workmen under labour laws and fundamental concept of valuation.

The next part deals in Finance and Accounts, covering topics like corporate finance and financial analysis, tax planning and GST.

Besides the bare act and the rules and regulations, the decided caselaws also form part of the legislation.  The syllabus for the Limited Insolvency Examination also includes 5 questions of 2 marks each, based on the cases decided by the Supreme Court, the NCLT And the NCLAT.

The last part deals with testing the practical understanding of the candidate.  For the purpose, two case studies or transaction analysis, one on corporate insolvency resolution and another on individual resolution will be asked.  Both the cases will consist of a comprehension describing the situation, followed by 4 relevant questions each.  Marks allotted per question for this section is two.

The syllabus may seem to be vast, but if tackled with proper planning, it is very easy to master.  Clearing the Limited Insolvency examination makes one eligible to be registered as the Insolvency Professional with any of the Insolvency Professional Agency and the IBBI.  The Insolvency Professionals can act as the Interim Resolution Professional, Resolution Professional, Liquidator or Bankruptcy Trustee, depending upon the stage of insolvency resolution process.

With a number of companies going into the Insolvency resolution process, either through creditors or on their own or on the directions issued by the RBI, there are great opportunities for the Insolvency Professionals for their personal and economic growth, at the same time contributing to the well-being of the nation.




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