Approval of committee of creditors for certain actions [ Section 28 ] - Insolvency Resolution And Liquidation For Corporate Persons - IBC

Approval of committee of creditors for certain actions Prior approval of CoC [ Section 28(1) of IBC, 2016 ] Notwithstanding anything contained in any other law for the time being in force, the resolution professional (RP), during the corporate insolvency resolution process, shall not take any of the following actions without the prior approval of the committee of creditors (CoC) namely:- (a) raise any interim finance in excess of the amount as may be decided by the committee of creditors in their meeting; (b) create any security interest over the assets of the corporate debtor; (c) change the capital structure of the corporate debtor, including by way of issuance of additional securities, creating a new class of securities or buying back or redemption of issued securities in case the corporate debtor is a company; (d) record any change in the ownership interest of the corporate debtor; (e) give instructions to financial institutions maintaining accounts of the corporate debtor for a debit transaction from any such accounts in excess of the amount as may be decided by the committee of creditors in their meeting; (f) undertake any related party transaction; (g) amend any constitutional documents of the corporate debtor; (h) delegate its authority to any other person; (i) dispose of or permit the disposal of shares of any shareholder of the corporate debtor or their nominees to third parties; (j) make any change in the management of the corporate debtor or its subsidiary; (k) transfer rights or financial debts or operational debts under material contracts otherwise than in the ordinary course of business; (l) make changes in the appointment or terms of contract of such personnel as specified by the committee of creditors; or (m) make changes in the appointment or terms of contract of statutory auditors of the corporate debtor or internal auditors of the corporate debtor. RP to convene meeting of CoC [ Section 28(2) ] The resolution professional (RP) shall convene a meeting of the committee of creditors (CoC) and seek the vote of the creditors prior to taking any of the actions under section 28(1). Requirement of vote of 66% of voting shares [ Section 28(3) ] No action under section 28(1) shall be approved by the committee of creditors unless approved by a vote of sixty-six per cent of the voting shares. Effect of action taken by RP without approval of the CoC [ Section 28(4) ] Where any action under section 28(1) is taken by the resolution professional without seeking the approval of the committee of creditors in the manner as required in this section, such action shall be void. CoC may report action of RP [ Section 28(5) ] The committee of creditors (CoC) may report the actions of the resolution professional under section 28(4) to the Board for taking necessary actions against him under this Code. Approval of committee of creditors for certain actions.