Chapter II - Corporate Insolvency Resolution Process
Section 28
Section 28: when must the RP seek prior committee approval?
A resolution professional cannot take the major actions listed in section 28(1) during CIRP without prior approval from the committee of creditors. Approval requires 66% of voting shares; an action taken without the required approval is void.
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Need advice on Section 28?
This article is for general information. Refer to the Insolvency and Bankruptcy Code, 2016 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Notwithstanding anything contained in any other law for the time being in force, the resolution professional, during the corporate insolvency resolution process, shall not take any of the following actions without the prior approval of the committee of creditors 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 or internal auditors of the corporate debtor.
(2) The resolution professional shall convene a meeting of the committee of creditors and seek the vote of the creditors prior to taking any of the actions under sub-section (1).
(3) No action under sub-section (1) shall be approved by the committee of creditors unless approved by a vote of sixty-six per cent. of the voting shares.
(4) Where any action under sub-section (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.
(5) The committee of creditors may report the actions of the resolution professional under sub-section (4) to the Board for taking necessary actions against him under this code.
Introduction
Section 28 is a consent gate for important decisions, not a general approval requirement for every routine transaction. The enacted 2026 Amendment Act inserted a separate section 28A after this provision but did not alter section 28 itself. Any guarantor-asset transfer under section 28A needs its separate current-law assessment.
Key takeaways
Prior approval
The listed actions need a committee vote before the RP acts.
66% threshold
Subsection (3) requires approval by 66% of voting shares, rather than a simple majority.
Void action
An action under subsection (1) taken without the required approval is void, and the CoC may report it to IBBI.
Financing and asset security
Check whether interim finance or a bank debit exceeds the committee-set amount, and obtain approval before creating security over debtor assets. Record the approved limit and supporting resolution.
Corporate structure and related parties
Capital and ownership changes, constitutional amendments, management changes and related-party transactions fall within the list. Review each proposed step against clauses (c), (d), (f), (g) and (j).
Contracts, personnel and audit appointments
The list also covers certain material-contract debt/right transfers, committee-specified personnel changes and changes involving statutory or internal auditors. Seek and record prior approval where the clause applies.
Practical checklist
Do
- Screen each proposed major action against all clauses of section 28(1).
- Convene a meeting and retain the vote calculation before implementation.
- Keep the consent resolution with the action's transaction records.
Avoid
- Do not rely on later ratification as a substitute for statutory prior approval.
- Do not use an old 75% voting threshold.
Glossary
- Voting share
- The share of committee votes used to calculate the 66% approval threshold.
- Related party transaction
- A dealing involving a related party of the debtor; section 28(1)(f) requires prior committee approval for the RP to undertake it during CIRP.
Frequently asked questions
Can the RP create security over debtor assets without the CoC?
No. Section 28(1)(b) lists that action for prior approval.
What if a listed action is taken without approval?
Section 28(4) makes the action void and subsection (5) permits reporting to IBBI.
Need help applying this provision to your situation?
Contact BizeneedLast updated 9 October 2026