No Fresh Insolvency To Be Initiated For 1 Year Under IBC Says Finance Minister Nirmala Sitharaman.
Finance Minister, Nirmala Sitharaman on Sunday gave details of the fifth and last instalment of the Rs 20 lakh crore economic package. Here he announced to protect companies found unable to repay loan instalments due to Coronavirus epidemic from action under the Insolvency Code for one year.
Sitharaman said that along with this, loans in the time of Coronavirus would be excluded from the definition of default. He said that the minimum amount of loan levied to start the insolvency processing process to benefit Small, Micro and Medium Enterprises (MSMEs) will be increased from Rs 1 lakh to Rs 1 crore.
The Finance Minister said that an ordinance will be brought for this. He also declared violations of certain provisions of the company law to be made non-criminal. This includes several procedural lapses and minor technical issues, including omissions in corporate social responsibility (CSR), inadequacy of board reports, delays in reporting to stock markets, delays in annual general meetings.
Most of the breaches resolvable with impunity or damages will be placed under the Internal Justice Decision Process (IAM). Ordinance will be issued in this regard. He said that seven resolvable offences under the Companies Act would be taken together and five of them would be kept under alternative rules.
In addition, the government allowed companies to directly list securities in the foreign market. The Finance Minister said that private companies, which list non-convertible debentures on stock exchanges, will not be considered as listed companies.
