12,352.35-3.15
Stock Analysis, IPO, Mutual Funds, Bonds & More

Govt took several steps for ease of doing biz: MCA

The IBC was amended twice in 2018 to disqualify undesirable persons from regaining control of companies undergoing resolution and to balance the interests of various stakeholders in the Code, especially interests of home buyers and micro, small and medium enterprises.

ET Bureau|
Dec 16, 2019, 11.16 AM IST
0Comments
ThinkStock Photos
bankruptcy
New Delhi: The government has taken several measures this year for ease of doing business, besides strengthening the insolvency and bankruptcy framework, the Ministry of Corporate Affairs said.

Under the Insolvency and Bankruptcy Code (IBC), 2016, of the 21,136 applications filed, 9,653 cases cumulatively involving Rs 3,74,931.30 crore have been disposed of at pre-admission stage, the government said in a statement on Sunday.

Further, in the 161 resolved cases, the realizable amount is Rs 1,56,814 crore, it said.

The IBC was amended twice in 2018 to disqualify undesirable persons from regaining control of companies undergoing resolution and to balance the interests of various stakeholders in the Code, especially interests of home buyers and micro, small and medium enterprises.

The amendments also sought to promote resolution over liquidation of corporate debtor by lowering the voting threshold of the committee of creditors and streamlining provisions relating to eligibility of resolution applicants, the government said.

As per the latest report in the Resolving Insolvency Index, India’s ranking jumped to 52 in 2019 from 108 in 2018.

The recovery rate increased to 71.6% in 2019 from 26.5% in 2018 and the time taken in recovery improved to 1.6 years in 2019 from 4.3 years in 2018.

The government modified provisions relating to issue of shares with differential voting rights to enable promoters of Indian companies to retain control of their companies in their pursuit of growth and creation of long-term value for shareholders, even as they raise equity capital from global investors.

Regarding debenture redemption reserve, the government revised the provisions related to its creation to deepen the bond market and reduce the cost of capital.

It also announced a reduction in DRR for unlisted companies from the present level of 25% to 10% of the outstanding debentures.

To enable greater ease of doing business, the government de-criminalized technical and procedural violations under the Companies Act, reducing the burden on criminal courts and the National Consumer Law Tribunal by shifting 16 offence sections to monetary penalty regime through the Companies (Amendment) Bill , 2019.

As per the World Bank’s “Doing Business” 2020 report, India moved up 14 positions to 63, compared to 77 in 2018.

The government also revised ‘de-minimis’ exemption under the Competition Act, 2002 for speeding up mergers and acquisitions in the country.

The government withdrew more than 14,000 prosecutions under the Companies Act, 2013, rationalized related party transaction provisions, and initiated the second phase of de-criminalisation of penal provisions under the Act.

The government also launched independent director’s databank to provide an easy to access and navigate platform for the registration of existing independent directors as well as individuals aspiring to become independent directors.

Among the latest developments in the IBC, the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019 was introduced in the Lok Sabha on December 12.

“The statement of objects and reasons of the Bill states that a need was felt to give the highest priority in repayment to last mile funding to corporate debtors to prevent insolvency, in case the company goes into corporate insolvency resolution process or liquidation, to prevent potential abuse of the Code by certain classes of financial creditors," the statement said.

Also Read

MCA plea to reopen CG Power books likely

MCA seeks details from Infosys on whistleblower complaint

MCA extends IL&FS DMD Bijay Kumar's tenure by one year

MCA's 2019 Review: Steps for ease in business, insolvency resolution

Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service