Mr. S, a company secretary in practice, was last appointed by M/s C Ltd. as secretarial auditor up to March 31, 2022. He now wants to be appointed as a liquidator. Advice and also comment on his eligibility to be appoint

Regulation 3 of the IBBI (Liquidation Process) Regulations, 2016 provides for eligibility for appointment as a liquidator. According to it, an insolvency professional shall be eligible to be appointed as a liquidator if he, and every partner or director of the insolvency professional entity of which he is a partner or director is independent of the corporate person. Explanation: (1) A person shall be considered independent of the corporate person, if he is eligible to be appointed as an independent director on the board of the corporate person under section 149 of the Companies Act, 2013, where the corporate person is a company; is not a related party of the corporate person; or has not been an employee or proprietor or a partner of a firm of auditors or secretarial auditors or cost auditors of the corporate person; or of a legal or a consulting firm, that has or had any transaction with the corporate person contributing ten per cent or more of the gross turnover of such firm, at any time in the last three years. (2) An insolvency professional shall not be eligible to be appointed as a liquidator if he, or the insolvency professional entity of which he is a partner or director is under a restraint order of the Board. (3) A liquidator shall disclose the existence of any pecuniary or personal relationship with the concerned corporate person or any of its stakeholders as soon as he becomes aware of it, to the Board and the Registrar. (4) An insolvency professional shall not continue as a liquidator if the insolvency professional entity of which he is a director or partner, or any other partner or director of such insolvency professional entity represents any other stakeholder in the same liquidation. Advice to Mr. S: For being eligible to become a liquidator, Mr. S shall first be an insolvency professional. As the question is silent whether he is an insolvency professional or not, we assume he is. However, even if he is an insolvency professional, Mr. S is not eligible to be appointed as a liquidator in this case because he was a secretarial auditor of M/s. C Ltd. till March 31, 2022. This falls within the last three financial years (i.e., April 1, 2021 to March 31, 2024). The regulations state that a person who has been a secretarial auditor of the corporate person in the last three years is not considered independent and thus ineligible to be appointed as a liquidator for that corporate person.