Section 204 of IBC 2016: Functions of Insolvency Professional Agencies
Section 204 sets out seven statutory functions of an insolvency professional agency (IPA), covering membership, professional standards, supervision, member protection, disciplinary action, grievance redressal and public disclosure.
What does Section 204 provide?
Section 204, titled "Functions of insolvency professional agencies", forms part of the Insolvency and Bankruptcy Code, 2016 (IBC). It states that an insolvency professional agency shall perform the functions listed in clauses (a) to (g). These duties make an IPA both a professional membership body and a frontline institution for professional oversight.
An insolvency professional agency is a body registered with the Insolvency and Bankruptcy Board of India (IBBI) under the Code to enrol and regulate its insolvency professional members. An insolvency professional is an individual enrolled with an IPA and registered with the IBBI in accordance with the applicable statutory framework. Membership of an IPA and registration with the IBBI are separate legal requirements.
The seven functions under Section 204
The following clauses retain the substance of the statutory provision and explain their practical significance.
Clause (a): Grant membership
(a) grant membership to persons who fulfil all requirements set out in its bye-laws on payment of membership fee;
An agency checks eligibility under its approved bye-laws before admitting a professional and collecting the applicable membership fee.
Clause (b): Professional conduct
(b) lay down standards of professional conduct for its members;
Its standards guide integrity, independence, competence, confidentiality and accountability, alongside applicable IBBI requirements.
Clause (c): Performance monitoring
(c) monitor the performance of its members;
Monitoring helps identify non-compliance, assess professional performance and support timely supervisory action.
Clause (d): Member interests
(d) safeguard the rights, privileges and interests of insolvency professionals who are its members;
The agency must protect legitimate member interests without compromising its regulatory or disciplinary responsibilities.
Clause (e): Membership discipline
(e) suspend or cancel the membership of insolvency professionals who are its members on the grounds set out in its bye-laws;
Membership action must follow the applicable grounds and procedural safeguards; this is distinct from IBBI registration action.
Clause (f): Grievance redressal
(f) redress the grievances of consumers against insolvency professionals who are its members;
Complaints concerning a member can be examined under the agency's grievance framework, subject to applicable rules.
Clause (g): Information disclosure
(g) publish information about its functions, list of its members, performance of its members and such other information as may be specified by regulations.
Publication supports transparency and helps stakeholders identify members and understand agency performance.
Related provisions and regulatory framework
Section 199 requires an IPA to hold a valid certificate of registration from the IBBI. Section 200 sets out the principles that guide registration, including professional development, ethical conduct and stakeholder protection. Section 201 governs applications, registration, renewal and possible suspension or cancellation of IPA registration. Section 203 concerns the governing board of an IPA.
Section 205 concerns the insolvency professional agency's bye-laws. Section 206 deals with enrolment and registration requirements for insolvency professionals. Section 208 addresses the functions and obligations of insolvency professionals. The IBBI (Insolvency Professional Agencies) Regulations, 2016 and the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 provide further operational requirements, as amended from time to time.
Frequently asked questions
What are the main functions of an insolvency professional agency?
Its seven Section 204 functions are membership admission, conduct standards, performance monitoring, protection of members' legitimate interests, membership discipline, consumer grievance redressal and publication of specified information.
Can an IPA cancel an insolvency professional's membership?
Yes. Section 204(e) authorises suspension or cancellation of membership on grounds set out in the agency's bye-laws, subject to the applicable procedural requirements.
Does IPA membership alone authorise an individual to practise as an insolvency professional?
No. Applicable IBC provisions and IBBI regulations also require registration with the IBBI and compliance with other conditions governing the assignment or practice.
Where can complaints against IPA members be raised?
Section 204(f) requires IPAs to redress consumer grievances against their members. The IBBI also has its own regulatory grievance and complaint mechanisms, subject to their applicable procedures.
Official legal resources
- India Code - Central legislation and statutory text
- Insolvency and Bankruptcy Board of India - Code, regulations, circulars and updates
- Ministry of Corporate Affairs - Government of India
- The Insolvency and Bankruptcy Code, 2016 - Lawdadi index
Updated: 23 October 2026. This article provides general legal information. Verify the latest amendments, regulations and official notifications before relying on a provision in a particular matter.