prpri Recent Corporate Law measures to boost Measures for Ease of Doing Business Recent Corporate Law measures to boost Measures for Ease of Doing Business

Ease of doing business for corporates and allocation of the package of 20 lakh crore for Atamnirbhar Bharat

Recent Corporate Law measures to boost Measures for Ease of Doing Business

> In the first phase of decriminalization of Company Law defaults in 2018, 16 compoundable offences were shifted to an in-house adjudication & penalty mechanism.

> Integrated Web based Incorporation Form – Simplified Proforma for Incorporating Company Electronically Plus (SPICe +) introduced which extends 10 services of different Ministries and one State Government through a single form.

> Databank of Independent Directors launched.

> Withdrawal of more than 14,000 prosecutions under the Companies Act, 2013.

> Rationalization of Related Party Transaction related provisions

> Timely Action during COVI D-19 to reduce compliance burden under various provisions of the Companies Act,2013 as well as enable Companies conduct Board Meetings, EGMs & AGMs, Rights issue by leveraging the strengths of Digital India

> In 221 resolved cases, 44% Recovery has been achieved since inception of IBC, 2016

  • Admitted claims amount to Rs. 4.13 Lakh crores
  • Realizable amount is Rs. 1.84 Lakh crores

> Under IBC, 13,566 cases involving a total amount of Rs 5.01 lakh crores (approx.) have been withdrawn before admission under provisions of IBC till 29th Feb 2020.

Enhancement of Ease of doing business through IBC related measures

> Minimum threshold to initiate insolvency proceedings raised to Rs 1 crore (from Rs 1 lakh, which largely insulates MSMEs)

> Special insolvency resolution framework for MSM Es 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.

Decriminalization 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.

Ease of Doing Business for Corporates

> 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 benches for NCLAT.
  • Lower penalties for all defaults for Small Companies, One person Companies, Producer Companies & Start Ups.

Overall allocation of the package of 20 Lakh Crore for the Atmanirbhar Bharat Mission

Sr. No. Measures Amount allocated (Rs. Cr.)
1 Emergency working capital facility for business  including MSMEs 3,00,000
2 Subordinate debt for stressed MSMEs 20,000
3 Fund of Fund for MSME 50,000
4 EPF support for Business & Workers 2800
5 Reduction in EPF Rates 6750
6 Special Liquidity scheme for NBFC/HFC/M Fls 30,000
7 Partial credit guarantee scheme 2.0 for liabilities of NBFCs/MFls 45,000
8 Liquidity Injection for DISCOMs 90,000
9 Reduction in TDS/TCS rates 50,000
10 Free food gain supply to stranded migrant workers for 2 Months 3500
11 Interest Subvention for MUDRA Shishu Loans 1500
12 Special credit facility to street vendors 5000
13 Housing CLSS-MIG 70,000
14 Additional emergency working capital through NABA RD 30,000
15 Additional Credit through KCC 2,00,000
16 Food Micro enterprise 10,0001
17 Pradhan Mantri Matsya Sampada Yojana 20,000
18 TOP to TOTAL: Operational Greens 500
19 Agri Infrastructure Fund 1,00,000
20 Animal husbandry Infrastructure Development Fund 15000
21 Promotion of Herbal Cultivation 4000
22 Beekeeping Initiative 500
23 Viability Gap funding 8,100
24 Additional MGNRES allocation 40,000
25 RBI Measures 8,01,603
26 Revenue lost due to tax concession since March 22nd 2020 7,800
27 Pradhan Mantri Garib Kalyan Package 1,70,000
28 PM’s Announcements for health sector 15,000
TOTAL 20,97,053

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August 2021