The Insolvency and Bankruptcy Code (Amendment) Act, 2018 – Analysis of the Key Changes
It has been almost two years since the Insolvency and Bankruptcy Code came into effect. Some significant amendments have recently been made to the Code based on inputs received from various market participants. The Insolvency and Bankruptcy (Amendment) Act, 2018 has a retrospective effect as it is deemed to be in force from November 23, 2017. The amendment extends the application of the Code to personal guarantors of the corporate debtor and proprietorship firms who were earlier immune from any liability under the Code. Similarly, the definition of ‘resolution applicant’ has also been revised. The article in this issue of Amicus also discusses amendments relating to qualifying criteria for resolution applicants, various disqualifications from submitting resolution plan, prohibition on sale of distressed assets to disqualified persons, and provisions for punishment where no specific punishment or penalty is provided. It is felt that the consequences of rendering certain class of people ineligible to participate in CIRP may have unintended results.
Budget 2018 - Key Changes for Corporate Sector
In addition to the several proposed amendments to the tax laws, the Finance Bill 2018 proposes amendments in the provisions of Reserve Bank of India Act, 1934, Securities and Exchange Board of India, Act 1992, Securities Contracts (Regulation) Act 1956, and Depositories Act 1996.
Notifications and Circulars
- SEBI - Schemes of Arrangement by Listed Entities and relaxation under sub-rule 19(7) of Securities Contracts (Regulation) Rules, 1957
- RBI permits overseas branches and subsidiaries of Indian Banks to refinance existing ECB of highly rated corporates along with Navratna and Maharatna PSUs, subject to conditions
- IBBI (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017, amended to add definition of “dissenting financial creditor”
- Negotiable Instruments (Amendment) Bill, 2017 introduced to provide relief to payees of dishonoured cheques and to discourage frivolous and unnecessary litigation
- FDI - Department of Industrial Policy & Promotion notifies amendments by way of Press Note No. 1 (2018 Series)
Ratio decidendi:
- Composite Petition claiming rectification of register of shareholders as well as reliefs for oppression and mismanagement, maintainable – NCLT, Ahmedabad
- Arbitration - General reference to a standard form sufficient for the incorporation of an arbitration clause, however a general reference to an earlier contract is not enough – Supreme Court
- Delivery of Demand Notice of an unpaid operational debt by a lawyer on behalf of operational creditor – Supreme Court
- Application under Insolvency & Bankruptcy Code may also be made when a Company Court has admitted a winding-up petition – Bombay High Court
- Regulation 28 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 not applicable in assignment deeds executed prior to insolvency resolution period – NCLT Hyderabad
- Limitation Act, 1963 is applicable to proceedings under the Insolvency & Bankruptcy Code, 2017 – NCLAT
- SEBI directions against fraudulent accounting practices perpetrated by an international firm ineffective if directions do not bring within its sweep the entire network of its operations
