Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Seventh Amendment) Regulations, 2025 – A snapshot
The Insolvency and Bankruptcy Board of India (“IBBI”) recently notified the IBBI (Insolvency Resolution Process for Corporate Persons) (Seventh Amendment) Regulations, 2025 (“Amendment”). The Amendment introduces additional provisions in Regulation 38 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which deal with mandatory contents of a resolution plan.
As per the Amendment, going forward, resolution plans must necessarily include: (i) a statement of beneficial ownership covering details of all natural persons who ultimately own or control the resolution applicant, along with the shareholding structure and jurisdiction of each intermediate entity; and (ii) a notarized affidavit executed by the resolution applicant confirming eligibility or ineligibility for Section 32A immunity under the Insolvency and Bankruptcy Code, 2016 (“Code”).
The format for the beneficial ownership disclosure has been prescribed by the IBBI by way of a circular dated 29 December 2025 (“Circular”). Further, the Circular also stipulates that ‘beneficial ownership’ must be determined as per Rule 9(3) of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. Under Rule 9(3), determination of beneficial ownership varies depending on the type of entity.
| Entity | Beneficial Owner |
| Company | Natural person, who, whether acting alone or together, or through one or more juridical person, has a controlling ownership interest or who exercises control. “Controlling ownership interest” herein means ownership of or entitlement to more than ten percent of shares or capital or profits of the company. “Control” includes the right to appoint majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements. |
| Partnership Firm | Natural person, who, whether acting alone or together, or through one or more juridical person, has ownership of/entitlement to more than ten percent of capital or profits of the partnership or who exercises control through other means. “Control” shall include the right to control the management or policy decision |
| Unincorporated association/Body of individuals | Natural person, who, whether acting alone or together, or through one or more juridical person, has ownership of or entitlement to more than fifteen percent of the property or capital or profits of such association or body of individuals |
| If no natural person is identified for company, partnership firm, or unincorporated association/body of individuals as mentioned above | The natural person who holds the position of senior managing official. |
| Trust | Author of the trust, the trustee, the beneficiaries with ten percent or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership |
This Amendment is a welcome step as it seeks to address a structural weakness in the system, which was being exploited by unscrupulous promoters who fielded resolution plans through layered and opaque ownership structures to regain control of their companies and also claim the benefit of Section 32A of the Code.
To give context, Section 32A is vital provision providing immunity to the corporate debtor against past offences. It states that the liability of a corporate debtor for an offence committed prior to the commencement of the Corporate Insolvency Resolution Process (“CIRP”) shall cease, and the corporate debtor shall not be prosecuted for such an offence from the date the resolution plan has been approved if such plan results in the change in the management or control of the corporate debtor to a person who was not (a) a promoter or in the management or control of the corporate debtor or a related party of such a person; or (b) a person with regard to whom the relevant investigating authority has, on the basis of material in its possession, reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint to the relevant statutory authority or Court.
By mandating that the resolution applicant must disclose its beneficial ownership and whether it is eligibility for immunity under Section 32A, opaque structuring methods to bypass the rigour of Section 32A is curbed. Further, the Committee of Creditors (“CoC”) is given a clearer picture of the state of affairs, thereby enabling it to decide, more confidently, whether a particular resolution applicant’s plan should be approved or not.
The Amendment can be accessed here. The Circular can be accessed here.
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