IBC - No fresh insolvency proceedings for 1 year; Threshold limit hiked to Rs 1 Cr
Published: May 17, 2020
By TIOLCORPLAWS News Service
NEW DELHI, MAY 17, 2020: THE Govt has raised the minimum threshold to initiate insolvency proceedings to Rs. 1 crore (from Rs. 1 lakh, which largely insulates MSMEs). Special insolvency resolution framework for MSMEs under Section 240A of the Code will be notified soon.
Suspension of fresh initiation of insolvency proceedings up to one year, depending upon the pandemic situation. Empowering Central Government to exclude COVID 19 related debt from the definition of “default” under the Code for the purpose of triggering insolvency proceedings.
Decriminalisation of Companies Act defaults
Decriminalisation of Companies Act violations involving minor technical and procedural defaults such as shortcomings in CSR reporting, inadequacies in Board report, filing defaults, delay in holding of AGM. The Amendments will de-clog the criminal courts and NCLT. 7 compoundable offences altogether dropped and 5 to be dealt with under alternative framework.
Ease of Doing Business for Corporates
Key reforms include:
• Direct listing of securities by Indian public companies in permissible foreign jurisdictions.
• Private companies which list NCDs on stock exchanges not to be regarded as listed companies.
• Including the provisions of Part IXA (Producer Companies) of Companies Act, 1956 in Companies Act, 2013.
• Power to create additional/ specialized benches for NCLAT
• Lower penalties for all defaults for Small Companies, One-person Companies, Producer Companies & Start Ups.
