Important announcements under compliance burden reduction under Atma Nirbhar Bharat Scheme:
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 COVID 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- Under IBC, 13,566 cases involving a total amount of Rs 5.01 lakh crores (approx have been withdrawn before admission under provisions of IBC till 29th Feb 2020.
Further 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 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.
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.