The First Schedule of the Insolvency and Bankruptcy Board of India (Insolvency Professionals)

Regulations, 2016 provides for the Code of Conduct for Insolvency Professionals, as reproduced
below. The detailed code of conduct has been included as an Annexure to this handbook.

Integrity & Objectivity

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INTERPRETATION AND BEST PRACTICES FOR

INTERPRETATION AND
BEST PRACTICES FOR
INSOLVENCY PROFESSIONALS

INSOLVENCY PROFESSIONAL

Integrity & Objectivity

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 INTEGRITY AND OBJECTIVITY
Integrity and Objectivity are among the fundamental principles of ethics for Insolvency

Professionals. As per the First Schedule of the IP Regulations, an IP is required to:

 Maintain integrity by being honest and straight forward in all professional relationships
 Not misrepresent facts and refrain from actions that bring disrepute to the profession
 Be objective in his dealings i.e. decisions be made without conflict of interest, bias, coercion,
or undue influence of any party, whether direct or indirect
 Disclose conflict of interest as soon as he comes to know of it
 Refrain from himself acquiring, whether directly or indirectly, the assets of the CD or
knowingly permit his relatives to do so

Integrity envisages being straightforward and honest in all professional and business
relationships. It implies fair dealing and truthfulness. The most important attribute of a professional
for which he is accountable is integrity in character and conduct.

Integrity, reputation and character are also pre-requisites for being considered as ‘fit and proper’ for
registration as IP under regulation 4 of the IP Regulations. A profession is only as good as its
members. Thus, it is necessary to ensure that a person with clean hands only can enter this
profession to manage the operation of the CD and conduct the insolvency resolution process.

In the matter of rejection of application for registration as an IP on the ground that the applicant is
not a fit and proper person as criminal proceedings were pending against him, the Board observed3:

“… What is material is that what others feel about the applicant who has been
charge sheeted for offences such as criminal conspiracy, cheating … Does such a
person inspire confidence of the stakeholders who can entrust him with property
of lakhs of crores for management under corporate insolvency resolution process?
Pendency of serious criminal proceedings against the applicant adversely impacts
his reputation and makes him not a person fit and proper to become an IP.”

3
Order dt. 26.02.2018 passed by Whole Time Member of IBBI
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A professional's reputation once dented, not only
impairs his own ability to render professional
services, but also tarnishes the image of the entire
profession. Accordingly, while every profession
should have tight entry criteria which allow only 'fit
and proper' persons to become its members, it should
also have procedures in place to regularly screen its
members to determine whether they continue to meet
the 'fit and proper' criteria.
An IP should consider himself an ambassador of
Five Commandments
Regulation 7(2) of the IP Regulations
provides that the registration of an IP is
subject to the conditions that the IP
shall:
A) at all times abide by the code, rules,
regulations, and guidelines thereunder
and the bye-laws of the IPA with which
he is enrolled;
B) at all times continue to satisfy the
requirements under Regulation 4;

the ecosystem as a whole and perform his duties
towards his clients, being mindful of his larger
responsibility towards the ecosystem. At no point
should his individual interests or the interests of
his clients, or any stakeholder involved be placed
above the letter and spirit of the standards and
laws governing the profession.
C) undergo continuing professional
education;
D) not outsource any of his duties and
responsibilities under the code, except
those specifically permitted by IBBI; and
E) abide by the code of conduct.

The IPs should not bring disrepute to the profession when undertaking
marketing or promotional activities, ensuring honesty and truthfulness, and shall
refrain from:
 Charging exaggerated claims for the services offered, or the qualifications
or experience of, the IP; or
 Disparaging references or unsubstantiated comparisons to the work of

others. 4

4
Ethics Code for Members issued by the Insolvency Practitioners Association of UK, dated March 2020 (Insolvency
Practitioners Association March 2020)
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