Economic Package | 'Minimum threshold to initiate insolvency proceedings raised to Rs 1 crore': Centre
New Delhi | Jagran Business Desk: In a bid to support companies amid the coronavirus pandemic, the central government on Sunday announced that no fresh insolvency will be initiated for one year under the Insolvency and Bankruptcy Code.
While making announces the fifth and final tranche of the Rs 20 lakh crore economic package, Finance Minister Nirmala Sitharaman said that minimum threshold to initiative insolvency proceeding has been raised to Rs 1 crore from Rs 1 lakh to benefit the Micro, Small and Medium Enterprises sectors (MSMEs).
The Finance Minister also announced that coronavirus-related debt will be excluded from definition of default while adding that an Ordinance will be promulgated to bring this change in IBC.
She also announced decriminalisation of the Companies Act in violations involving minor technical and procedural defaults including shortcoming in CSR reporting, inadequacies in board report, filing defaults and delay in holding AGM.
Majority of the compoundable offences sections will be shifted to internal adjudication mechanism (IAM), she said adding that amendments will be brought through an Ordinance and will de-clog the criminal courts and NCLT.
Seven compoundable offences under the Companies Act altogether dropped and five to be dealt with under alternative framework, the finance minister said.
Also, the government allowed companies to directly list securities in permissible foreign jurisdictions.
Private companies, which list non-convertible debentures on stock exchanges, would not to be regarded as listed companies, she added.
Sitharaman on Sunday said reforms will be the focus of the fifth and final tranche of economic stimulus package to deal with the economic fallout of the COVID-19 pandemic.
She said the package would focus on MGNREGA, healthcare and education, businesses, de-criminalisation of the Companies Act, ease of doing business, public sector undertakings, and resources related to state government.
(With PTI inputs)
Posted By: Aalok Sensharma