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'Several steps in 2019 to push ease of doing business'
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SME Times News Bureau | 17 Dec, 2019
In its year-end review, the Ministry of Corporate Affairs (MCA) on
Sunday mentioned the various steps it undertook in 2019 for ease of
doing business and creating a robust insolvency framework.
"In
pursuance to objective of providing greater 'ease of doing business' to
all stakeholders, bring about greater transparency in corporate
structure and fostering better corporate compliance so as to enhance the
efficiency of the processes under Companies Act, 2013, the Ministry of
Corporate Affairs (MCA) has taken several landmark initiatives/decisions
during last one year (January-November 2019)," said an official
statement.
It noted that India has improved its ranking on the
World Bank's 'Doing Business 2020' report. As per the report, India has
moved up 14 positions to 63rd position from 77th position in 2018.
Among
other steps for easing the business environment, the government
introduced the 'Integrated Incorporation Form -- Simplified Proforma for
Incorporating Company Electronically' (SPICe) which extends eight
services from three ministries through a single form. Technical and
procedural violations were de-criminalised under Companies Act which
reduced the burden on criminal courts and the National Company Law
Tribunal (NCLT).
The Competition Commission of India (CCI)
introduced an automatic system of approval for combinations under 'Green
Channel'. Under this process, the combination is deemed to have been
approved upon filing the notice in the prescribed format. This system
would significantly reduce time and cost of transactions, the MCA
statement said.
The government also modified the provisions
relating to issue of shares with Differential Voting Rights (DVRs) with
the objective of enabling promoters of Indian companies to retain
control of their companies in their pursuit for growth and creation of
long-term value for shareholders, even as they raise equity capital from
global investors.
Earlier this month the ministry launched an
'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.
The
ministry further mentioned the steps taken for improving the insolvency
resolution mechanism and said that as per the latest 'Resolving
Insolvency Index', India's ranking jumped 56 places to 52 in 2019 from
108 in 2018.
It said that the recovery rate increased from 26.5
per cent in 2018 to 71.6 per cent in 2019 and time taken in recovery
improved from 4.3 years in 2018 to 1.6 years in 2019.
The latest
and the most significant development in the IBC came last week, when the
government introduced the Insolvency and Bankruptcy Code (Second
Amendment) Bill, 2019 in the Lok Sabha on Thursday.
Among others
changes, after the amendment, home buyers, willing to take the developer
to an insolvency court, will now have to ensure that a minimum of 100
home buyers or 10 per cent of the total home buyers file for bankruptcy
against the developer. Among other amendments, it also provides for the
protection of buyers from criminal proceedings against previous
promoters of the bankrupt firm.
The Parliament also passed the
the Insolvency and Bankruptcy Code (Amendment) Bill, 2019 which came
into effect from August 16, 2019. This amendment Bill provides for the
timely conclusion of cases, greater flexibility for corporate
restructuring for maximizing value of assets, protecting primacy of
secured creditors and removing voting deadlock of homebuyers among
others.
Further, the Insolvency and Bankruptcy (Insolvency and
Liquidation Proceedings of Financial Service Providers and Application
to Adjudicating Authority) Rules, 2019 were issued on November 15, 2019
which provide a generic framework for insolvency and liquidation
proceedings of financial service providers (FSPs) other than banks.
Notification
of clause (e) of section 2 of IBC was issued on November 15 and
enforced from December 1, which extends the scope of the IBC by
bringing the resolution and bankruptcy of personal guarantors of
corporate debtors under IBC.
As per the ministry, out of 21,136
applications filed, 9,653 cases involving a total amount of around Rs
3,74,931.30 crore have been disposed off at pre-admission stage of IBC.
Around
2,838 cases were admitted into Corporate Insolvency Resolution Process
(CIRP), out of which 306 cases are closed by appeal or review, or were
withdrawn.
In the 161 resolved cases, the realisable amount is Rs 1,56,814 crore, as per the statement.
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