THE GOVERNMENT HAS INTRODUCED A BILL TO CHANGE THE INSOLVENCY LAW AND TO INTRODUCE A PRE-PACKAGED APPROACH FOR MSMES
Finance Minister Nirmala Sitharaman presented the Insolvency and Bankruptcy Code (Amendment) Bill 2021 in the Lok Sabha on Monday, amidst a disturbance from the opposition over a variety of concerns.
President Ram Nath Kovind signed the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 on April 4, 2021, to provide a new bankruptcy resolution option for Micro, Small, and Medium Businesses (MSMEs). In a pre-packaged process, major stakeholders such as creditors and shareholders work together to find a potential buyer and create a resolution plan before going to the National Company Law Tribunal (NCLT).
- The NCLT must approve all resolution plans under the IBC.
- To be eligible for this scheme, they must have a minimum payment default threshold of Rs 10 lakh.
- There would be a punishment for initiating a pre-packaged bankruptcy resolution process fraudulently or maliciously with the goal to defraud others, as well as for fraudulent administration of the corporate debtor during the process. Offenses relating to the pre-packaged insolvency resolution procedure would also be punished.
INVESTORS WHO REGISTER NEW TRADING OR DEMAT ACCOUNTS IN OCTOBER WILL HAVE THE OPTION OF PROVIDING A NOMINATION
Investors who register new trading and Demat accounts after October 1 will have the option of submitting nominations or opting out of the nomination, according to market regulator SEBI. In addition, the regulator has developed a nomination form type as well as a ‘declaration form’ for opting out of the nomination. Furthermore, by March 31, 2022, all existing qualified trading and Demat account holders must offer their choice of nominee, failing which their trading and Demat accounts would be suspended. Trading members and depository participants will be able to open new trading and Demat accounts starting October 1, 2021, only after receiving the necessary forms.
The account holder’s nomination and declaration document will be signed under his or her wet signature, and no witness will be necessary. If the account holder uses a thumb impression instead of a wet signature, the paperwork will require a witness’ signature.
The online nomination and declaration form can also be signed using the e-sign option, which eliminates the need for a witness. Intermediaries must ensure that suitable mechanisms are in place, including the ability to e-sign documents, as well as take all required precautions to safeguard the confidentiality and security of client records.