1. Consider the following statements regarding the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019.
1. The Bill has introduced a new clause that sets a threshold of 100 homebuyers, or 10% of the buyers, in a residential project.
2. The amendments aim to remove the bottlenecks in insolvency resolution, streamline Corporate Insolvency Resolution Process and protect last-mile funding to boost investment in the financially distressed sectors.
3. The amendments could also lead to “ring-fencing corporate debtor resolved under the IBC in favour of a successful resolution applicant from criminal proceedings against offences committed by previous management.
Which of the statement(s) given above is/are correct?
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019
The Bill has introduced a new clause that sets a threshold of 100 homebuyers, or 10% of the buyers, in a residential project, whichever is less, as a requirement to jointly take the developer to an insolvency court. This means that an individual homebuyer, who is a financial creditor, cannot file an insolvency application.
The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019 proposes to make amendments in the Insolvency and Bankruptcy Code, 2016.
The second amendment bill seeks to amend sections 5(12), 5(15), 7, 11, 14, 16(1), 21(2), 23(1), 29A, 227, 239, 240 in the Insolvency and Bankruptcy Code, 2016 and insert new section 32A in the code.
The new amendments will remove the difficulties faced during insolvency resolution, to further ease doing of business.
The amendments aim to remove the bottlenecks in insolvency resolution, streamline Corporate Insolvency Resolution Process and protect last-mile funding to boost investment in the financially distressed sectors.
The amendments also introduce additional thresholds to prevent frivolous triggering of the Corporate Insolvency Resolution Process. They also ensure that the foundation of a corporate debtor’s business is not lost and it can continue as a going concern by clarifying that the concessions, licenses, permits and clearances could not be terminated or suspended and their renewal denied also cannot be denied during the moratorium period.
The amendments could also lead to “ring-fencing corporate debtor resolved under the IBC in favour of a successful resolution applicant from criminal proceedings against offences committed by previous management.
Insolvency and Bankruptcy Code, 2016
Insolvency and Bankruptcy Code, 2016 provides a time-bound process for resolving insolvency in companies and among individuals.
Insolvency is a situation where individuals or companies are unable to repay their outstanding debt.
Bankruptcy, on the other hand, is a situation whereby a court of competent jurisdiction has declared a person or other entity insolvent, having passed appropriate orders to resolve it and protect the rights of the creditors. It is a legal declaration of one’s inability to pay off debts.
The Government implemented the Insolvency and Bankruptcy Code (IBC) to consolidate all laws related to insolvency and bankruptcy and to tackle Non-Performing Assets (NPA), a problem that has been pulling the Indian economy down for years.
The Code is quite different from the earlier resolution systems as it shifts the responsibility to the creditor to initiate the insolvency resolution process against the corporate debtor.
The recently proposed amendments aim to remove bottlenecks, streamline the corporate insolvency resolution process, and protect the last mile funding in order to boost investment in financially distressed sectors.
Ring-fencing the companies resolved under the IBC from regulatory actions during past management can make the IBC process attractive for investors and acquirers.
Objectives of IBC
To consolidate and amend all existing insolvency laws in India.
To simplify and expedite the Insolvency and Bankruptcy Proceedings in India.
To protect the interest of creditors including stakeholders in a company.
To revive the company in a time-bound manner.
To promote entrepreneurship.
To get the necessary relief to the creditors and consequently increase the credit supply in the economy.
To work out a new and timely recovery procedure to be adopted by the banks, financial institutions or individuals.
To set up an Insolvency and Bankruptcy Board of India.
Maximization of the value of assets of corporate persons.
Salient features of the Insolvency and Bankruptcy Code, 2016
Covers all individuals, companies, Limited Liability Partnerships (LLPs) and partnership firms.
National Company Law Tribunal (NCLT) for companies and LLPs
Debt Recovery Tribunal (DRT) for individuals and partnership firms
Establishment of an Insolvency and Bankruptcy Board of India to exercise regulatory oversight over insolvency professionals, insolvency professional agencies and information utilities.
Insolvency professionals handle the commercial aspects of insolvency resolution process.
Insolvency professional agencies develop professional standards, code of ethics and be first level regulator for insolvency professionals members leading to development of a competitive industry for such professionals.
Information utilities collect, collate, authenticate and disseminate financial information to be used in insolvency, liquidation and bankruptcy proceedings.
Enabling provisions to deal with cross border insolvency.
Achievements of the IBC
IBC is a vast improvement on the two earlier laws legislated to recover bad loans —the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDB).
Speedier Resolution: Before IBC, resolution processes took an average of 4-6 years, after the enactment of IBC; they came down to 317 days.
Higher Recoveries: Recoveries are also higher: 43% after the IBC, against 22% before it.
Due to the institution of IBC, we have seen that many business entities are paying up front before being declared insolvent. The success of the Act lies in the fact that many cases have been resolved even before it was referred to NCLT.
A steady increase in the number of admitted corporate insolvency resolution process (CIRP) cases.
By the end of March 2019, a total of 1858 cases were admitted for resolution – of which 152 have been appealed/reviewed/settled, 91 have been withdrawn, 378 ended in liquidation and 94 have ended in approval of resolution plans.
2. Which of the following countries border the Mediterranean Sea?
Select the correct option.
(a) 2, 3 and 5 only
(b) 2, 3, 4 and 5 only
(c) 1, 2, 3 and 5 only
(d) All of the above
3. Consider the following statements with respect to the Corporate Social Responsibility (CSR).
1. India is one of the first countries in the world to make CSR mandatory for companies following an amendment to the Companies Act, 2013 in 2014.
2. Section 135(1) of the Act prescribes thresholds to identify companies which are required to constitute a CSR Committee.
3. As per the Companies (Amendment) Act, 2019, CSR is applicable to companies before completion of 3 financial years.
Which of the following statements is/are correct?
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Corporate Social Responsibility (CSR)
It is the integration of socially beneficial programs and practices into a corporation’s business model and culture.
How is it regulated in India?
India is one of the first countries in the world to make CSR mandatory for companies following an amendment to the Companies Act, 2013 (Companies Act) in 2014.
Under the Companies Act, businesses can invest their profits in areas such as promoting rural development in terms of healthcare, sanitation, education including skill development, environmental sustainability, etc.
Section 135(1) of the Act prescribes thresholds to identify companies which are required to constitute a CSR Committee – those, in the immediately preceding financial year of which:
1. Net worth is Rs 500 Crore or more; or.
2. Turnover is Rs 1000 Crore or more; or.
3. Net profit amounts to Rs 5 Crore or more.
As per the Companies (Amendment) Act, 2019, CSR is applicable to companies before completion of 3 financial years.
Amount to be spent:
1. Companies are required to spend, in every financial year, at least 2% of their average net profits generated during the 3 immediately preceding financial years.
2. For companies that have not completed 3 financial years, average net profits generated in the preceding financial years shall be factored in.
Treatment of unspent amounts:
1. Amounts to be utilised towards a CSR activity, but unspent must be parked in a special account as prescribed under the provision within 30 days of the end of the relevant financial year.
2. The unspent amount must be utilised by the company for the particular CSR activity within a period of 3 financial years from the date of such transfer, failing which, it must be transferred to any fund provided for in schedule VII of the Companies Act namely inter alia the Clean Ganga Fund, Swachh Baharat Kosh, Prime Minister’s National Relief Fund.
3. Any unspent amount which does not relate to an ongoing CSR activity must be transferred to a fund provided for in Schedule VII within a span of 6 months of the end of the relevant financial year.
Fines and Imprisonment:
Provision for penalty in the form of fine on the company and officers in default, between Rs 50,000 – Rs 25, 00,000, has been inserted in case of failure in compliance with Section 135. Additionally, every officer in default may also be imprisoned for a term of up to 3 years.
Social responsibility has a strategic importance for two reasons:
1. A healthy business can only succeed in a healthy society. Thus, it is in the best interest of a company to produce only goods and services which strengthen the health of society
2. If the company wants to succeed in the long term it needs to have the acceptance—or licence to operate—from social actors affected by the company’s’ operations.
4. Consider the following statements regarding the Lalit Kala Akademi.
1. The Akademi was constitued under the Societies Registration Act 1860.
2. It is the nodal agency of the Government of India to promote understanding of Indian art, both within and outside the country.
Which of the following statements is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Lalit Kala Akademi awards
President Kovind confers 61st annual Lalit Kala Akademi awards.
President Ram Nath Kovind today conferred 61st annual Lalit Kala Akademi’s awards on 15 artistes at the Rashtrapati Bhavan.
The awardees include Anoop Kumar Manzukhi Gopi from Kerala, David Malakar from West Bengal, Hari Ram Kumbhawat from Rajasthan, Devendra Kumar Khare from Gujarat, Dinesh Pandya from Maharashtra, Mohan Kumar from Karnataka and Yashwant Singh from Delhi.
Culture Minister Prahlad Singh Patel and the Akademi Chairman Dr. Uttam Pacharne were also present on the occasion.
Lalit Kala Akademi
The Lalit Kala Akademi was inaugurated in New Delhi on August 5th, 1954, by the then Minister for Education, Maulana Abul Kalam Azad. The youngest of the three Akademies founded by the Government of India, the Lalit Kala Akademi was established in pursuance of the dream of the first Prime Minister of independent India, Pandit Jawaharlal Nehru for a cultural and national identity. Thus the Lalit Kala Akademi as one among three such national organizations, that emerged. The LKA was the principal establishment to direct its focus on activities in the field of visual arts. In his inaugural speech, Maulana Abul Kalam had stated:“…The Akademi must work to preserve the glorious traditions of the past and enrich them by the work of our modern artists. It must also seek to improve standards and refine public taste…”
Lalit Kala Akademi, National Academy of Art, New Delhi was set up by the Government of India as an autonomous body, in 1954. The Akademi was given statutory authority in 1957, under the Societies Registration Act 1860.
It has headquarters at New Delhi and regional centres at Bhubaneswar, Chennai, Kolkata, Lucknow and Shimla.
Lalit Kala Akademi is the nodal agency of the Government of India to promote understanding of Indian art, both within and outside the country.
The Akademi conducts international exhibition on contemporary art in New Delhi every three years.
It also conducts the National Exhibition of Photography and Art.
It publishes bi-annual art journals, Lalit Kala Contemporary (English), Lalit Kala Ancient (English) and Samkaleen Kala (Hindi).
5. Two-State solution sometime seen news which of the following statement is correct regarding this?
(a) It is based on a UN resolution of 1947 which proposed two states.
(b) It is related to the territorial solution for the Israel-Palestine issue.
(c) India has reiterated its stand and supported the Two-State solution.
(d) All of the above
The “two-state solution” is based on a UN resolution of 1947 which proposed two states – one would be a state where Zionist Jews constituted a majority, the other where the Palestinian Arabs would be a majority of the population. The idea was however rejected by the Arabs.
For decades, it has been held by the international community as the only realistic deal to end the Israeli-Palestinian conflict.
India has consistently voted in favour of those resolutions that promote the two-state solution with a Palestinian claim to East Jerusalem.