What Is the In poor health Industrial Corporations Act (SICA)?
The In poor health Industrial Corporations Act of 1985 (SICA) was a key piece of legislation dealing with the issue of rampant trade sickness in India. The In poor health Industrial Corporations Act (SICA) was enacted in India to find unviable (“ill”) or most certainly ill companies and to help with their revival, if imaginable, or their closure, if no longer. This measure was taken to release investment locked up in unviable companies for productive use elsewhere.
Key Takeaways
- The In poor health Industrial Corporations Act of 1985 (SICA) was an Indian legislation enacted to find unviable (“ill”) companies that may pose systematic financial likelihood.
- SICA was repealed and altered in 2003 by the use of the In poor health Industrial Corporations (Specific Provisions) Repeal Act of 2003, which watered down some facets of the original Act and stuck some problematic elements.
- SICA was then completely repealed in 2016, partially because of a couple of of its provisions overlapped with the provisions of a separate Act, the Corporations Act of 2013.
Understanding the In poor health Industrial Corporations Act (SICA)
The In poor health Industrial Corporations Act (SICA) was enacted in 1985 to deal with a protracted problem inside the Indian monetary machine: trade sickness.
The act defined a ill trade unit as one that had existed for a minimum of 5 years and had incurred amassed losses similar to or exceeding its whole web value at the end of any financial 12 months.
Causes of Industrial Sickness
The In poor health Industrial Corporations Act (SICA) identified reasonably a couple of interior and external elements responsible for this epidemic. Inside of elements during the organizations included mismanagement, overestimation of name for, mistaken location, poor problem implementation, unwarranted growth, private extravagance, failure to modernize and poor labor-management relationships. External elements included an energy crisis, raw materials shortage, infrastructure bottlenecks, inadequate credit score ranking facilities, technological changes, and global market forces.
Industrial Sickness and the Financial machine
Usual trade sickness impacts the monetary machine in reasonably a couple of techniques. It’s going to finally end up in loss of government income, tying up scarce property in ill units, increasing non-performing assets held by the use of banks and monetary institutions, increasing unemployment, loss of production and poor productivity. SICA was carried out to rectify the ones opposed socioeconomic consequences.
SICA Legislation and Provisions
The most important SICA provision was putting in place two quasi-judicial our our bodies–the Board for Industrial and Financial Reconstruction (BIFR), and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). BIFR was organize as an apex board to spearhead coping with the economic sickness issue, along with reviving and rehabilitating most certainly ill units and liquidating non-viable companies. AAIFR was set up to pay attention appeals in opposition to BIFR orders.
Repeal of the In poor health Industrial Corporations Act
SICA was repealed and altered by the use of the In poor health Industrial Corporations (Specific Provisions) Repeal Act of 2003, which diluted some SICA provisions and plugged sure loopholes. A key trade inside the new act was that except combating trade sickness, it aimed to cut back its emerging incidence by the use of ensuring that companies did not hotel to a sickness declaration merely to escape legal duties and obtain get admission to to concessions from financial institutions.
The repeal of SICA were given right here into whole have an effect on on December 1, 2016. It was completely repealed, partially, because of a couple of of its provisions overlapped with the Corporations Act of 2013. The Corporations Act included the arrival of the National Company Legislation Tribunal (NCLT) and the National Company Legislation Appellate Tribunal (NCLAT). The NCLT can pay attention cases related to the management of a company, mergers, and rehabilitations of companies, among other issues. Together with to the NCLT’s authority is the Insolvency and Bankruptcy Code of 2016, which states that corporate insolvency processes can be initiated quicker than the NCLT.
