The Hindu : New insolvency law gets President's nod

Online edition of India's National Newspaper
Saturday, Jan 18, 2003

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New insolvency law gets President's nod

By Our Legal Correspondent

NEW DELHI Jan. 17. The Companies (Second Amendment) Bill, 2002 which seeks to amend the Companies Act, 1956 and provides for a new, modern, efficient and time-bound insolvency law has received the President's assent and it has been notified as Act No. 11 of 2003.

The Act provides for both rehabilitation and winding up of sick companies within a timeframe of a maximum of two years as against the existing system which takes about 18 to 26 years.

Further, the Act envisages setting up of a National Company Law Tribunal with several Benches to be notified by the Government all over the country, appeal from its judgment before the National Company Law Appellate Tribunal, taking over the jurisdiction of High Courts in the matters of liquidation of sick companies and abrogation of Company Law Board.

It also repeals the Sick Industries (Special Provisions) Act, 1985 and dismantling of the Board for Industrial Finance and Reconstruction (BIFR) created thereunder.

Under the new law a corpus fund is to be created, known as Rehabilitation Fund for taking care of the workers of sick companies and their investors as per the global standards in keeping with the norms of globalisation of Indian economy under the World Trade Organisation regime. The Government will implement this Act from a date to be notified by the Department of Company Affairs in stages.

Competition Bill gets assent

The President has also given assent to the Competition Bill, 2002 and it has been notified as Act No. 12 of 2003. It seeks to repeal the Monopolies and Restrictive Trade Practices Act, 1969 and dismantle the MRTP Commission created thereunder.

In the place of the MRTP Commission, a Competition Commission of India (CCI) will be set up to prevent practices having adverse effect on competition, to promote and sustain competition in market, to prevent abuse of dominance, to ensure quality of products and services, to protect the interest of consumers and to ensure freedom of trade carried on by other participants in markets in India and for matters connected therewith. The CCI will function as a regulator like other regulators to give impetus to quality of products and services, competition, faster mergers and acquisitions of companies, regulation of acquisitions and mergers coming within the threshold limits, allowing dominance and prevention of abuse of dominance to give effect to the second generation economic reforms on the pattern of the global standards set by the United Kingdom, the U.S. and the European Commission.

The provisions of the Act will be implemented in three phases from a date each to be notified by the Government in the Department of Company Affairs. Accordingly, the corporate sector in the country will be given enough timeframe to acclimatise themselves to the new scenario before the CCI is formally constituted.

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