Skip to main content

Panel Suggests Higher Threshold for NCLT Cases

By
Backs decentralisation of power to RoCs & an in-house adjudication mechanism
The 14-member expert committee set up by the government to suggest decriminalisation of less-significant violations of the companies law has favoured an increase in the threshold for cases referred to the National Company Law Tribunals (NCLTs). It has also backed decentralisation of power to the registrar of companies (RoCs), regional directors and an in-house adjudication mechanism to free up the overburdened NCLT benches. That could help speed up the resolution of banks’ bad loans as the tribunals are central to the Insolvency and Bankruptcy Code (IBC) process. The changes can be implemented through modification of rules and won’t require amendments to law.
The tribunals currently hear violations involving fines of more than Rs.5 lakh. The decision on what the new limit should be has been left to the government. “The enhancement of this limit, along with simultaneous operation of in-house adjudication mechanism, will lead to de-clogging of routine matters pending with NCLT,” a senior government official said. The ministry of corporate affairs is also planning to refer routine matters such as conversions to privately held from publicly held companies either to the in-house mechanism or to RoCs and regional directors. “Referring routine matters such as conversion from public company to private company to NCLT needlessly burdens NCLT. Shifting jurisdiction of such matters to other judicial mechanisms available would further unburden the NCLT,” the official said, adding that the recommendations would be implemented soon by changing the rules.
The Companies Act has three broad categories of violations–minor, major and others. Minor violations are procedural in nature, covered under 18 sections, and settled through the in-house mechanism. Major violations largely involve fraud and invite both fines and imprisonment. Most violations fall in the ‘others’ category--more serious than minor violations but not involving fraud. The major and other violations are tried by special courts. Most of these relate to non-filing of financial statements and annual results. Around 15 of these violations, including filing-related ones, could also be shifted to the in-house mechanism. “This is a welcome relief for the already over-burdened NCLT benches,” said Anshul Jain, partner, Luthra & Luthra Law Offices. “Not only will it help in reducing a lot of workload from the NCLT benches but it will also help in making the whole process more efficient.”
Currently, about 9,000 cases are pending before NCLT benches in the country for insolvency and other routine matters. More than 5,000 cases are in Mumbai and about 2,100 are in New Delhi. The ministry is also working on the one-time resolution of cases related to deregistration, liquidation, restoration and relief to ease pressure on the NCLT benches and other special courts to free them up to handle more insolvency cases.
The Economic Times, 09th August 2018

Comments

Post a Comment

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...
Post a Comment
Read more

SFBs should be vigilant, proactive to mitigate risks: RBI deputy guv

By
  The Reserve Bank of India’s Deputy Governor Swaminathan J on Friday instructed the directors of small finance banks (SFBs) to be vigilant and proactive in identifying emerging risks in the sector.Speaking at a conference for directors on the boards of SFBs, Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models.Additionally, he highlighted the need for strengthening cybersecurity to protect the entities against digital threats and urged for a stronger focus on financial inclusion, customer service, and grievance redressal to ensure a broader reach of banking services.Executive Directors S C Murmu, Rohit Jain, and R L K Rao, along with other senior officials representing the Supervision, Regulation, and Enforcement Departments of the RBI, also participated in the conference.   -  Business Standard  30 th  September, 2024
Post a Comment
Read more

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

By
  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...
Post a Comment
Read more