Current Affairs Enhancement of Ease of Doing business through IBC related measures

Enhancement of Ease of Doing business through IBC related measures

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Minimum threshold to initiate insolvency proceedings raised to Rs. 1 crore (from Rs. 1 lakh, which largely insulates MSMEs).
Special insolvency resolution framework for MSMEs under Section 240A of the Code to 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

Decriminalization of Companies Act violations involving minor technical and procedural defaults (shortcomings in CSR reporting, inadequacies in board report, filing defaults, delay in holding AGM) Majority of the compoundable offences sections to be shifted to internal adjudication mechanism (IAM) and powers of RD for compounding enhanced (58 sections to be dealt with under IAM as compared to 18 earlier).
The Amendments will de-clog the criminal courts and NCLT
7 compoundable offences altogether dropped and 5 to be dealt with under alternative framework

Improvement in rankings in ‘starting a business’ and ‘insolvency resolution’ have contributed to the overall improvement in India’s ranking on EoDB.
Further key reforms to 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 benchesfor NCLAT.
Lower penalties for all defaults for Small Companies, Oneperson Companies, Producer Companies & Start Ups.