New Delhi: In a move aimed at providing a friendly ecosystem for honest entrepreneurs, the Ministry of Corporate Affairs (MCA) is mulling to make penalty provisions for offenders more stringent by making major changes in the existing rules.
According to sources, the move has been initiated to encourage fair trade practices in a holistic manner and build a confidence among honest businessmen in the country. The government is also identifying 'suspicious' activities of 'big sharks' to take necessary action against them for giving a message that unfair practices would not be accepted anymore, the sources added.
"The proposed penal provisions would be so 'harsh' that defaulters wouldn't even think to break the rules," sources said, adding, "The government is working to make operational part of companies a human-interface free affair to prevent unfair practitioners from taking advantage of the 'vulnerable' system."
The government is aiming to bring transparency in the whole process so that honest businessmen should not feel cheated in comparison to those who follow unfair practices to promote their businesses such as using shell companies to park their assets, etc, the
"It's a hard fact that those who follow right ways to promote their businesses, they find it very difficult to carry out their operations, which means there are flaws in the system and it needs to be rectified. The government is working in this direction," the sources said.
"The passage of insolvency (amendment) bill is another bold step in this direction as the Bill proposes to relax the norm for disqualifying a promoter from bidding for a company undergoing insolvency resolution," the sources said.
The ordinance had barred promoters whose companies have had their loans declared NPAs by banks for over a year from bidding for these. The year is counted from the declaration of a loan as an NPA till the invitation of bids.
The Bill proposes to calculate this period of one year till an application of insolvency is accepted by the National Company Law Tribunal (NCLT).