[Breaking] IBC Threshold Raised As ₹ One Crore; Govt May Consider Suspending Sections 7, 9 & 10

In view of the lockdown due to COVID-19, the Finance Ministry on Tuesday announced special relief packages for companies under the Companies Act and the Insolvency and Bankruptcy Code.

The existing threshold of Rupees one lakh for triggering insolvency is raised to Rupees one crore.

The Ministry will also consider suspending Sections 7, 9, 10 of IBC for six months if the lockdown situation is continuing beyond April 30.

This is done for the benefit of MSMEs struggling due to the lockdown.

This was announced in the press conference convened by Union Finance Minister Nirmala Sitharaman and Minister of State Anurag Thakur on Tuesday afternoon.

The Ministry also extended the deadline for compliance regime under the Companies Act 2013 till April 30.

In respect of the MCA 21 Registry, there is a moratorium being issued from April 1, 2020 till September 30, 2020. There will not be an additional fees for late filings. The mandatory requirement for holding board meetings is relaxed for a period of 60 days for the next two quarters.

Applicability of Companies (Auditors Report) Order 2020 will be from the Financial Year 2020-2021 instead of 2019-2020.

For the year 2019-2020, if the independent directors of the company has not been able to hold a single meeting, the same shall not be seen as a violation.

For newly incorporated companies, there is a requirement of filing declaration for commencement of business within 6 months of incorporation. This has been extended for 6 more months.

If there is any director in a company, who is not meeting the requirement of minimum residency in India (182 days), it will not be treated as a violation.

There is a requirement of depositing 15% of debentures maturing in a particular year in specified instruments by April 30. That deadline has been extended up to June 30, 2020.

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