Ease of Doing Business: Finance Minister Nirmala Sitharaman has made a big announcement to promote Ease of Doing Business in the country. The Finance Minister said that no new insolvency proceeding will be started for the next year. That is, the new insolvency proceeding has been suspended completely for one year from today. The MSME sector will benefit from this. No insolvent proceeding will be started for companies for 1 year. A special bankrupt procedure will be brought for small and medium industries.
Minimum Threshold amount increased to 1 crore
To start the insolvency proceedings, the minimum threshold amount has been increased to Rs 1 crore. Earlier this amount was 1 lakh rupees. In fact, many businesses have been badly affected in lockdown due to lockdown. In such a situation, this step is a relief for the companies stuck in the economic crisis. Finance Minister Nirmala Sitharaman announced the fifth and final phase of the economic relief package under self-reliant India (Atmanirbhar Bharat Abhiyaan) today in which these big announcements were made.
What about decriminalization
Under the Companies Act, companies will be given the benefit of decriminalization. If that technical and procedural nature will not be criminal proceedings on minor mistakes. There are 7 such compoundable offenses, which will be excluded from the category of crime. Companies will not be dragged into criminal cases for petty violations. This will strengthen the Ease of Doing Business.
Under the Insolvency and Bankruptcy Code (IBC), loans related to Covid-19 will not be classified as 'default'. This will provide relief to companies from not filing for insolvency.