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TMI BlogNOTICE INVITING COMMENTS ON THE DRAFT RULES W.R.T. REVIVAL AND REHABILITATION OF SICK COMPANIES RELATED PROVISIONS UNDER THE COMPANIES ACT, 2013X X X X Extracts X X X X X X X X Extracts X X X X ..... NOTICE INVITING COMMENTS ON THE DRAFT RULES W.R.T. REVIVAL AND REHABILITATION OF SICK COMPANIES RELATED PROVISIONS UNDER THE COMPANIES ACT, 2013 - News and Press Release Dated:- 3-3-2016 - News - GOVERNMENT OF INDIA Ministry of Corporate Affairs NOTICE INVITING COMMENTS ON THE DRAFT RULES W.R.T. REVIVAL AND REHABILITATION OF SICK COMPANIES RELATED PROVISIONS UNDER THE COMPANIES ACT, 2013 Dated the 02nd March, 2016 National Company Law Tribunal (NCLT) and its Appellate Authority is at an advanced stage of constitution. After its constitution, it is proposed to commence the provisions relating to Revival of sick companies ( Chapter XIX ) of Companies Act, 2013 . The draft Rules for the said provisions have been prepared by a Committee consisting of Ministry officials and Experts drawn from various fields. Suggestions/Comments are invited on the above draft rules along with justification in brief may be addressed/sent latest by 14th March, 2016 through email at [email protected]. It is requested that the name, Telephone number and address of the sender should be indicated clearly at the time of sending suggestions/comments in the following format. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hapter No./Name of Chapter:- Revival and Rehabilitation of Sick Companies ( Chapter XIX ) Name, Address, Contact No. of Stake holder __________________ SL. No Rule / Form No Suggestion Justification Remarks Draft Rules on Revival and Rehabilitation of Sick Companies The Committee has made an endeavor to draft the Rules in accordance with the scheme of the Act which is a creditor oriented process of revival and rehabilitation. Further, special care has been taken to make rules and forms to provide the relevant disclosures to ensure transparency in the process and strict timelines has also been provided so as to ensure timeliness of the process. The Committee has also drafted a set of Regulations so that the Tribunal may control its regular functioning in respect of the implementation of Rehabilitation Rules. [To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-Section (1)] MINISTRY OF CORPORATE AFFAIRS Notification New Delhi, _____________ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... _ GSR No. _____ In exercise of powers conferred by Sections 468 and 469 Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules: 1 . Short Title and Commencement. (1) These Rules may be called the Companies (Revival and Rehabilitation of Sick Companies) Rules, 2016. (2) They shall come into force on the date of their publication in the official gazette. 2. Definitions. (1) In these rules, unless the context otherwise requires- (a) Act means the Companies Act, 2013 . (b) `Annexure means Annexures appended to these Rules; (c) ` Appellate Authority for Industrial and Financial Reconstruction means an Authority as constituted under Section 5 of Sick Industrial Companies (Special Provisions) Act, 1985; (d) Board for Industrial and Financial Reconstruction means a Board as established under Section 4 of Sick Industrial Companies (Special Provisions) Act, 1985; (e) Claim means - (i) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured, or unsecured; (ii) right to remedy for breach of contract under any law for the time being in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orce, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured (f) Creditor means any person to whom a debt is owed; (g) Committee of Creditors means a representative body of creditors appointed in terms of Section 257 of the Act having consultative and other powers as specified under the Act; (h) Debt means a means a liability or obligation in respect of a claim, which is due from any person;. (i) Fee means fee as defined in Schedule of Fees as prescribed under NCLT Rules made under Chapter XXVII of the Act; (j) Form means the Form appended to the rules; (k) Secured Creditor means a creditor in whose favour a security interest is created; . (l) Security interest means right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or performance of any obligation of any person: Provided that secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity interest shall not include a performance guarantee; (M) Sick Company means a company which has failed to pay or to secure or compound the debts owed to the secured creditor referred to in Section 253(1) of the Act within time period as specified therein. PROCEDURE FOR REVIVAL AND REHABILITATION 3. Filing of the applications with Tribunal and service of notice or other documents.- (1) The process of filing of application under Chapter XIX of the Companies Act, 2013 and Rules for service of notice or other documents would be as provided in the National Company Law Tribunal, 2016 and the National Company Law Appellate Tribunal Rules, 2016. (2) The provisions of the above stated chapter for filing of applications and service of notice or other documents be accordingly read to be a part of the instant Rules except for the specific rules being provided in the present chapter . 4. Filing of applications, references etc.- (1) Every application for determination of a company as a sick company shall be submitted to the Tribunal exercising jurisdiction over the company along with affidavit in accordance with the provisions of Section 253 of the Act shall be made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form No. RNR 1 in triplicate. (2) If the application is to be presented by the secured creditor, the affidavit must be made by the secured creditor itself or by person duly authorized to act on behalf of the said secured creditor. In any case there must be stated in the affidavit the nature of his authority and the means of his knowledge of the matters to which the affidavit relates. (3) If the application is to be presented by the company, the affidavit must be made by one of the Directors, or the authorized representatives of the company, stating himself to make it on behalf of the company. (4) If the reference is to be presented by the Central government or Reserve bank of India or a State Government or a public financial institution or a state level institution or a scheduled bank it is to be treated as if it were a petition by the company and the procedural requirements be accordingly complied. Provided that where the matters in reference to the sick companies were pending before the Board for Industrial and Financial Reconstruction (BIFR) or the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) prior to the abatement of the proceedings und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Sick Industrial Companies (Special Provision) Act, 1985 (1 of 1986) as per clause (d) of sub-section (1) of section 434 of this Act, the company, whose reference if so abated may file an application to the Tribunal under sub-section (4) of section 253 within 180 days from the commencement in accordance with the provisions of this Act. Provided further that any company or appellant whose appeal was pending before the Appellate Authority prior to the abatement, shall be entitled to re-file the appeal against any surviving order of the Board for Industrial and Financial Reconstructions before the National Company Law Appellate Tribunal within 180 days from the commencement of this Act in accordance with the provisions of this Act. Provided that where an application for the stay of any proceeding for the winding up of the company or for execution, distress or the like against any property and assets of the company or for the appointment of a receiver in respect thereof and that no suit for the recovery of any money or for the enforcement of any security against the company shall lie or be proceeded with, is to be made at any stage of proceedings after the filing of the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or reference, it shall be made in Form No. RNR. 2 and accompanied by a fee as specified in Schedule of Fees . 5. Contents of application, reference.- (1) The application, reference shall state the deponent's belief that the company has failed to pay the debt within a period of thirty days of the service of notice of demand by the secured creditor representing fifty percent or more of its outstanding amount of debt or to secure or compound it to the reasonable satisfaction of the creditor and the grounds of that belief; (2) There shall in the affidavit be provided a statement of the company's financial position, specifying (to the best of the deponent's knowledge and belief) assets and liabilities, including contingent and prospective liabilities. (3) Details shall be given of any security known or believed to be held by secured creditors of the company. (4) If any petition has been presented for the winding up of the company, details of such petition shall be given in the affidavit, so far as within the immediate knowledge of the deponent. (5) If there are other matters which, in the opinion of those intending to present the application, wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l assist the Tribunal in determining whether the company be declared as a sick company, those matters (so far as lying within the knowledge or belief of the deponent) shall also be stated. 6. Application for revival and rehabilitation.- (1) Any secured creditor or the Company under sub section (1) of Section 254 may make an application to the Tribunal for the determination of measures that may be adopted with respect to the revival and rehabilitation of such company shall be made in Form No. RNR. 3. (2) Contents of proposal:- (i) For the purpose of sub section (2) of Section 254, a draft scheme of revival and rehabilitation shall be in Form No. RNR 4 . No such application shall be filed unless it is accompanied by the following: (ii) The following matters shall be stated, or otherwise dealt with, in the proposal- (a) Balance Sheet of the Company for the last four years; (b) Details of the legal cases of the company; (c) Details of the company's assets, with an estimate of their respective values, (d) Techno Economic Viability Study report; (e) List of the creditors of the company alongwith the class wise breakup and amount due to such creditor; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (f) the extent (if any) to which the assets are charged in favour of creditors, (g) the nature and amount of the company's liabilities (so far as within immediate knowledge), the manner in which they are proposed to be met, modified, postponed or otherwise dealt with by means of the arrangement, and (in particular)- (h) how it is proposed to deal with secured creditors, workers and statutory authorities having claims against the company, (i) how persons connected with the company (being creditors or other stake holders) are proposed to be treated under the arrangement, and (j) The projected time period required for the revival and rehabilitation of the company under the draft proposal. 7. Determination of sickness.- (1) The order of the Tribunal declaring the debtor company as a sick company shall be in Form No. RNR. 5 . (2) Upon determination of the debtor company as a sick company, the Applicant at its own cost shall cause the publication of a notice in Form No. RNR. 6 in at least once in a vernacular language newspaper in the principal vernacular language of the district in which the registered office of the company is situated and circulating in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at district and at least once in English in an English newspaper circulating in that district within seven days from the date of the receipt of certified copy of the order of the Tribunal determining the debtor company as a sick company. 8. Declaration by sick company . Where the sick company has no draft scheme of revival and rehabilitation to offer, it shall file a declaration to that effect accompanying the application to be filed by virtue of subsection (1) of section 254 duly verified and signed by any two of its Directors and duly supported by a resolution of the Board of Directors. 9. Appointment of interim administrator. (1) Within seven days of receipt of an application for the revival and rehabilitation of the company, the Tribunal shall, by an order, (i) post the matter for being heard on any date not later than ninety days from the date of receipt of the application under section 254; (ii) direct that a notice be sent to the debtor company, if it is not the applicant; (iii) appoint an interim administrator and the order appointing the interim administrator shall be in Form No. RNR 7 ; (iv) direct the interim administrator to cause the publicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of a notice in Form RNR No. 8 at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated and circulating in that district and at least once in English in an English National Daily newspaper circulating in that district within seven days from the date of receipt of the certified copy of the order of the Tribunal appointing him; (v) Direct the Interim Administrator to call and convene the meetings of: (a) each class of creditors within 14 days from the date of receipt of the order of appointment of Interim Administrator for the purpose of nominating representatives for the committee of creditors in accordance with section 257. Provided that the committee of creditors shall not have any related parties of the sick company. (b) a meeting of the committee of creditors within 45 days from the date of receipt of the order of appointment of Interim Administrator to ascertain and submit a report (in Form No. RNR 9) within a period of sixty days from the date of receipt of the order of appointment of the interim administrator as to whether it is possible to adopt certain measures f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the revival and rehabilitation of the sick company; (vi) give directions to the interim administrator to protect and preserve the assets of the sick company and for its proper management, if required; (vii) give such other directions, as may be required (2) The interim administrator shall be entitled (i) to have an office at the registered office of the sick company; (ii) to access all information and inspect all books and papers, books of account, registers and records of the sick company at all places where the sick company has offices, branches, divisions, factories, warehouses , and such other places where the affairs of the sick company are being or have been carried as ascertained from the records of the sick company; (iii) to apply to the Tribunal for such orders or directions or assistance as may be necessary; (iv) to apply to the Tribunal for extension of time for anything to be done under these rules within a stipulated time: Provided no such extension shall be granted without reasons to be recorded in writing (3) The Tribunal shall determine the fee payable to the interim administrator which shall be borne out of the assets of the sick co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany in the first instance failing which the Tribunal shall pass appropriate orders for payment of the fees of the Interim Administrator. (4) The interim administrator shall be entitled to reimbursement of all costs, charges and expenses incurred by him subject to sanction by the Tribunal and shall be entitled to an advance on costs out of the assets of the sick company failing which the Tribunal shall pass appropriate orders for the same . (5) The Tribunal on its own or on an application of any secured creditor or the sick company, if satisfied that the conduct of the interim administrator was not fair and reasonable in the facts and circumstances obtained at that time when such question had arisen, after giving him an opportunity of being heard, it may, by order, terminate the services of the interim administrator and appoint in his place another person as the interim administrator and give such interim administrator such time as may be considered appropriate for performing his obligations under the Act. 10. (1) Where the sick company did not submit a draft scheme of revival and rehabilitation the Tribunal may direct the interim administrator to take over the manageme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the sick company upon which the interim administrator shall take over the management of the sick company and such order shall further direct the interim administrator- (i) to notify the sick company to that effect; (ii) to cause the publication of a notice at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated and circulating in that district and at least once in English in an English National Daily newspaper within seven days from the date of receipt of certified copy of the order of the Tribunal directing him to take over the management of the sick company; (iii) to display a copy of the aforesaid notice at the registered office and on the website of the company, if any, and at such other places where the business of the company is carried out. (iv) to serve a copy of the aforesaid notice to all the directors and bankers of the sick company, income tax authorities, Registrar of Companies having jurisdiction over the company and all key parties concerned with the affairs of the sick company (as ascertained by the interim administrator) that he has taken over the manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the sick company; (v) to call for such information and explanation as he may require from such persons and parties as he may deem fit; (vi) to apply to the Tribunal for appropriate directions as may be required for seeking the co-operation of any person and for meeting any other exigencies to discharge his obligations effectively. (2) On publication of a notice - (a) all powers of the Board of Directors of the Company immediately before the publication of the notice, shall be suspended; (b) any contract of management between the company and any director thereof holding office as such immediately before publication of the notice, shall cease to have any effect ; (c) the interim administrator appointed under section 256 shall take such steps as may be necessary to take into their custody or under their control all the property, effects and actionable claims to which the business of the company is, or appears to be, entitled and all the property and effects of the business of the company shall be deemed to be in the custody of the administrator, as the case may be, as from the date of the publication of the notice; (d) the interim administrator appointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this section, shall alone be entitled to exercise all management powers of the company, including powers of the Board of directors or as the case may be, of the persons exercising powers of superintendence, direction and control, of the business of the company whether such powers are derived from the memorandum or articles of association of the company of the company or from any other source whatsoever. (e) the interim administrator may apply to apply to the District Magistrate or the Chief Metropolitan Magistrate as the case may of the district for any protection that may be required for safeguarding himself, his assistants, any expert that the interim administrator may be consulting, and the assets, properties, books and records of the sick company. (3) Where the management of a company is taken over by the interim administrator, then,- (a) it shall not be lawful for the shareholders of such company or any other person to nominate or appoint any person to be a director of the company; (b) no resolution passed at any meeting of the shareholders of such company shall be given effect to unless approved by the interim administrator MEETINGS OF CREDITORS AND C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OMMITTEE OF CREDITORS 11. Meeting of Creditors. For the purposes of this Act, the notice of meeting of creditors shall be issued to all creditors as on the date fixed by the Tribunal, in Form No. RNR 10 and not less than Ten clear days shall be there between the date of issue of the notice and the date of the meeting. 12. Constitution of committee of creditors. (1) The committee of creditors shall consist of not more than 7 members . (2) Any creditor of the company is eligible to be a member of the committee, so long as his claim has not been rejected for the purpose of his entitlement to vote. (3) A body corporate may be a member of the committee, but it cannot act as such otherwise than by a representative appointed. (4) The Interim Administrator shall appoint the member nominated by each class of creditors at their respective meetings as per Rule 9(v)(a) above as a member on the Committee Of Creditors subject to the condition that the member and the nominating creditor are not related parties of the the sick company. 13. Formalities of establishment. (1) The creditors' committee does not come into being, and accordingly cannot act, until the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterim administrator has issued a certificate of its due constitution. (2) No person may act as a member of the committee unless and until he has agreed to do so; and the interim administrator's certificate of the committee's due constitution shall not be issued unless and until at least 3 of the persons who are to be members of it have agreed to act as members. (3) As and when the others (if any) agree to act, the interim administrator shall issue an amended certificate. (4) The certificate, and any amended certificate, shall be filed in Tribunal by the interim administrator within a period of seven days of its issuance. (5) If after the first establishment of the committee there is any change in its membership, the interim administrator or the Company Administrator as the case may be, shall report the change to the Tribunal within a period of seven days of issuance of its certificate effecting such a change. 14. Functions and meetings of the committee. (1) The creditors' committee shall assist the interim/company administrator in discharging his functions in accordance with the provisions of the Act. (2) Subject to the provisions of these rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the meetings of the committee shall be held when and where determined by the interim/company administrator. (3) The interim administrator shall call a first meeting of the committee not later than 30 days after its first establishment; and thereafter he or the Company Administrator as the case may call a meeting- (a) if so requested by a member of the committee or his representative (the meeting then to be held within 14 days of the request being received by the administrator), and (b) on a specified date, if the committee has previously resolved that a meeting be held on that date. (4) The interim administrator or the company administrator as the case may be shall give 7 days' written notice of the venue of any meeting to every member of the committee (or his representative designated for that purpose), unless in any case the requirement of notice has been waived by or on behalf of any member. (5) The aforesaid waiver may be obtained either at or before the meeting. 15. The chairman at meetings. (1) The chairman at any meeting of the creditors' committee shall be the interim administrator or the company administrator as the case may be or a person n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ominated by him in writing to act. (2) A person so nominated must be either- (a) one who is qualified to act as an company administrator in relation to the company, or (b) an employee of the interim administrator or the company administrator or his firm, who is experienced in revival and rehabilitation of sick companies. 16. Quorum. A meeting of the committee shall be deemed to be duly convened if due notice of it has been given to all the members, and at least 3 members are present or represented. 17. Committee-members' representatives. (1) A member of the committee may, in relation to the business of the committee, be represented by another person (not being a related party of the sick company) duly authorised by him for that purpose. (2) A person acting as a committee-member's representative must hold a letter of authority entitling him so to act (either generally or specially) and signed by or on behalf of the committee-member. (3) The chairman at any meeting of the committee may call on a person claiming to act as a committee-member's representative to produce his letter of authority, and may exclude him if it appears that his authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty is deficient. (4) No person shall on the same committee, act at one and the same time as representative of more than one committee-members. (5) Where a member's representative signs any document on the member's behalf, the fact that he signs as a representative must be stated below his signature. 18. Resignation.- A member of the committee may resign by notice in writing delivered to the interim or company administrator. 19. Termination of membership. (1) Membership of the creditors' committee is automatically terminated if the member- (a) becomes bankrupt, or (b) at 3 consecutive meetings of the committee is neither present nor represented, or (c) ceases to be a creditor. (2) However, if the cause of termination is the member's bankruptcy, his trustee/administrator in bankruptcy replaces him as a member of the committee. 20. Removal. A member of the Committee Of Creditors may be removed by the Interim Administrator/ Company Administrator, as the case may be, if such member is negligent in participating in the process of revival and rehabilitation of the sick company or acts in a fraudulent manner. 21. Vacancies. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of any vacancy, the Interim Administrator shall appoint the nominee of the same class, whose nominee has vacated the Committee, provided that the Creditor so appointed is not a related party of the sick company. 22. Procedure at meetings of creditors committee. (1) At any meeting of the creditors' committee, each member of the committee (whether present himself, or by his representative) has one vote; and a resolution is passed when a majority of 75% of the members (by value, taking the total outstanding debt into account) present or represented have voted in favour of it. (2) Every resolution passed shall be recorded in writing, either separately or as part of the minutes of the meeting. (3) A record of each resolution shall be signed by the chairman and placed in the company's minute book. 23. Resolutions by post. (1) In accordance with this Rule, the administrator may seek to obtain the agreement of members of the creditors' committee to a resolution by sending to every member (or his representative designated for the purpose) a copy of the proposed resolution. (2) Where the administrator makes use of the procedure allowed by this Rule, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he shall send out to members of the committee or their representatives (as the case may be) a statement incorporating the resolution to which their agreement is sought, each resolution (if more than one) being sent out in a separate document. (3) Any member of the committee may, within 7 business days from the date of the administrator sending out a resolution, require him to summon a meeting of the committee to consider the matters raised by the resolution. (4) In the absence of such a request, the resolution is deemed to have been passed by the committee if and when the administrator is notified in writing by a majority of the members that they concur with it. (5) A copy of every resolution passed under this Rule, and a note that the committee's concurrence was obtained, shall be placed in the company's minute book. 24. Summoning of meeting of creditors. (1) Subject to the provisions of these Rules, the interim administrator in fixing the venue for the meeting of the creditors, shall have regard primarily to the convenience of the creditors. (2) Meetings shall in each case be summoned for commencement between 10.00 and 16.00 hours on a business day. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) With every notice summoning meeting there shall be sent out forms of proxy, agenda of the meeting and resolution of the meeting. 25. The chairman at meeting of creditors. (1) Subject to the provisions of these Rules, at the meeting of the creditors, the interim administrator shall be the chairman. (2) If for any reason he is unable to attend, he may nominate another person to act as chairman in his place with prior approval of the Tribunal; but a person so nominated must be a person qualified to act as an interim administrator/company administrator. 26. Attendance by company officers. (1) At least 14 days' notice to attend the meetings shall be given by the interim administrator- (a) to all directors of the company, and (b) to any persons in whose case the interim administrator thinks that their presence is required as being officers of the company, or as having been directors or officers of it at any time in the two years immediately preceding the date of the notice. (2) The chairman may, if he thinks fit, exclude any present or former director or officer from attendance at a meeting, either completely or for any part of it; and this applies whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or not a notice under this Rule has been sent to the person excluded. VOTING RIGHTS AND MAJORITY 27. Voting rights (creditors). (1) Subject to the provisions of these Rules, every creditor who was given notice of the creditors' meeting is entitled to vote at the meeting or any adjournment of it. (2) Votes are calculated according to the amount of the creditor's debt as on the date of filing of application for revival and rehabilitation u/s 254. (3) A creditor shall not vote in respect of a debt for an unliquidated amount, or any debt whose value is not ascertained. (4) At any creditors' meeting the chairman has power to admit or reject a creditor's claim for the purpose of his entitlement to vote, and the power is exercisable with respect to the whole or any part of the claim. (5) The chairman's decision on a creditor's entitlement to vote is subject to appeal to the Tribunal by any creditor or the company. (6) If the chairman is in doubt whether a claim should be admitted or rejected, he shall mark it as objected to and allow the creditor to vote, subject to his vote being subsequently declared invalid if the objection to the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is sustained. (7) If on an appeal the chairman's decision is reversed or varied, or a creditor's vote is declared invalid, the Tribunal may order another meeting to be summoned, or make such other order as it thinks just. The Tribunal's power to make an order under this paragraph is exercisable only if it considers that the matter is such as gives rise to unfair prejudice or material irregularity. (8) An application to the Tribunal by way of appeal against the chairman's decision shall not be made after the end of the period of 30 days from the date of the meeting. (9) The chairman is not personally liable for any costs incurred by any person in respect of an appeal under this Rule. 28. Requisite majorities (creditors). At the creditors' meeting for any resolution to pass approving any proposal for revival and rehabilitation of sick companies there must be a majority of three-fourth in value of the creditors (of the total outstanding debt of the company) present in person or by proxy and voting on the resolution. 29. Adjournment of meeting of creditors. The meeting of the creditors committee can be adjourned if the Chairman of the meetin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g deems it fit subject to the time limits as prescribed herein and under the Act. 30. Order of Tribunal and appointment of company administrator. (1) On the date of hearing, if the Tribunal is satisfied that the creditors representing three-fourth in value of the amount outstanding against the sick company present and voting had resolved that by adopting certain measures it is possible to revive and rehabilitate the sick company, it may, by order, appoint a company administrator directing him to prepare a scheme of revival and rehabilitation for the sick company, failing which the Tribunal shall by an order direct the winding up of the sick company. (2) The order of the Tribunal shall be in Form No. RNR 11 if the Tribunal orders the winding up of the sick company and in Form No. RNR 12 if the Tribunal orders to appoint a company administrator. (3) The order appointing the company administrator may contain such directions to the company administrator including but not limited to taking a complete inventory of all assets and liabilities of the sick company; all books of account, registers, maps, plans, records, documents of title and all other documents of whatever na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture. (4) The company administrator shall give public notice of the order of the Tribunal, appointing him to prepare the scheme of revival and rehabilitation and if applicable, the order of the Tribunal directing him to take over the assets or the management of the sick company, in Form No. RNR 13 at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated and circulating in that district and at least once in English in an English National Daily Newspaper within seven days from the date of receipt of certified copy of the order of the Tribunal. (5) Within thirty days of the passing of the order appointing the company administrator, the company administrator shall file a certified copy of the order with the Registrar of Companies having jurisdiction over the registered office of the sick company. (6) The Tribunal shall determine the fee payable to the company administrator which shall be borne out of the assets of the Company in the first instance failing which the Tribunal shall pass appropriate orders for payment of the fees of the Interim Administrator. (7) The company adminis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trator shall be entitled to reimbursement of all costs, charges and expenses incurred by him subject to sanction by the Tribunal and shall be entitled to an advance on costs out of the assets of the Company failing which the Tribunal shall pass appropriate orders for the same. (8) The fees payable to company administrator, the costs, charges and expenses may be payable out of the assets of the company if so directed by the Tribunal; (9) Subject to the approval of the Tribunal, the company administrator shall have the following powers, namely:- (i) to have an office at the registered office of the sick company; (ii) to visit all offices, branches, divisions, factories, warehouses, and such other places where the affairs of the sick company are being or have been carried out as ascertained from the records of the sick company; (iii) to access all information and inspect all books and papers, books of account, registers and records of the sick company at all places where the sick company has offices, branches, divisions, factories, godowns, and such other places where the affairs of the sick company are being or have been carried out as ascertained from the records of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sick company; (iv) to issue notices to any promoter, director, ex director, employee, ex-employee, secretary, officer, manager, creditor, debtor and call for any information or explanation as he may need for carrying out his duties; (v) to obtain from any authority of the Central Government or any State Government or quasi- Judicial authorities or court or Tribunal or any other judicial forum copy of any record, return, document, plaint, pleading, or any other paper which in his opinion may assist him in effective performance of his duties; (vi) to appoint a lawyer or chartered accountant or any other expert with the approval of the Tribunal for the purpose of assistance and ascertaining the measures that are necessary to be taken for the revival and rehabilitation of the sick company, costs whereof shall be paid by the applicant; (vii) to apply to the District magistrate or the Chief Metropolitan Magistrate as the case may be of the district for any protection that may be required for safeguarding himself, his assistants, any experts that he may be consulting with, and assets and properties,books and records of the sick company; (viii) to apply for extension of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime for anything to be done under these rules within the stipulated time; Provided that such such extension shall be granted without reasons to be recorded in writing. (ix) to perform such other functions and duties as the Tribunal may direct . PROPOSAL BY COMPANY ADMINISTRATOR 31. Preparation of scheme by the company administrator.- The company administrator's draft scheme for revival and rehabilitation of a sick company shall specify- (a) all such matters as under as the sick company would be required to include in a scheme as per the provisions of this Act and these Rules; and (b) such other matters (if any) as the administrator considers appropriate for ensuring that the creditors of the company (and shareholders, if applicable) are able to reach an informed decision on the proposed scheme . 32. Sanction of Scheme.- (1) The Company administrator shall issue a notice in Form No. RNR 14 calling separate meetings of the secured and unsecured creditors within sixty days of his appointment and place the draft scheme for their approval. (2) The company administrator shall fix a venue for the creditors' meeting and the company meeting if so require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, and give at least 14 days' notice of the meetings- (a) in the case of the creditors' meeting, to all the creditors specified in the company's statement of affairs, and to any other creditors of whom the company administrator is aware; and (b) in the case of the company meeting, to all persons who are, to the best of his belief, members of the company. (3) Each notice sent out under this Rule shall be sent with the following- (a) a copy of the company administrator s proposal, and (b) a copy of the statement of affairs or, if he thinks fit, a summary of it (the summary to include a list of creditors and the amounts of their debts). (4) The notices of such meetings of creditors and shareholders shall be published at least once in a vernacular language newspaper in the principal vernacular language of the district in which the registered office of the company is situated and circulating in that district and at least once in an English National daily within fourteen days prior to the date fixed for the respective meetings. (5) In case of scheme relates to amalgamation of sick company with any other company notice shall be sent to the authorities spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified in sub-section (5) of section 230 of the Act. (6) Every creditor shall be entitled to be present in person or through an authorized representative and the creditor shall submit the form of authorization or power of attorney not less than forty-eight hours in advance intimating that the meeting will be attended by its authorized representative. The presence of an authorized representative of a creditor shall be deemed to be the presence of the creditor in person. (7) In a shareholder meeting of a company, every shareholder shall be entitled to attend and vote in person or through a proxy. (8) Meetings of creditors or shareholders shall be called and held only during working hours between 1000 Hrs to 1800 Hrs on any business day. (9) The quorum for such meetings of creditors shall be the presence in person or by proxy of creditors representing not less than three-fourth in value of the amount outstanding against the sick company, in case of secured creditors and one-fourth in value in case of unsecured creditors and even the presence of single creditor of that class may be sufficient to form a valid quorum. (10) The quorum for a meeting of shareholders of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ick company shall be the same as provided in section 103. (11) The company administrator shall chair the meetings of creditors and shareholders of the sick company and regulate the meeting, as he thinks fit. (12) Decisions in such meetings of secured and unsecured creditors shall be made by requisite majority of votes and value of debt owed by the sick company shall determine the number of votes of a particular creditor and the decision of the company administrator shall be final as regards the value of debt owed to a particular creditor by the sick company. (13) Any accidental omission to consider, include or issue notice to one or more unsecured creditors shall not invalidate any action taken by the company administrator or as the case may be, by the creditors in good faith: Provided that in case if omissions had resulted in an outcome which would not have been the outcome had the votes (based on value of debt) been recorded correctly, application by creditors can be made for reconsideration. (14) The company administrator shall make an application in Form No. RNR 15 to the Tribunal for sanctioning the scheme. (15) No application for sanctioning the scheme s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be filed before the Tribunal unless it is accompanied by the following, namely: (i) the fee as prescribed in Schedule of Fees; (ii) a copy of the scheme of revival and rehabilitation, approved in accordance with Rule 32, duly certified by the company administrator; (iii) a copy of the audited financial statements of the sick company for the financial year immediately preceding the date of the application; (iv) any other document which the company administrator may consider necessary; (v) a copy of the minutes of the meetings of creditors and shareholders, if any, that approved the scheme of revival and rehabilitation duly certified by the company administrator. (16) The Tribunal shall post the matter for a hearing on any date within sixty days of the date of filing of the application and the company administrator shall advertise the date and time of hearing of the application by the Tribunal and also features of the draft scheme of revival and rehabilitation (in brief) in Form No. RNR 16 at least once in a vernacular newspaper in the principal vernacular of the district in which the registered office of the company is situated and circulating in that distri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and at least once in English in an English National Daily within fifteen days prior to the date of hearing so fixed by the Tribunal. (17) The Tribunal may make modifications in the scheme in pursuance of sub-section (3) of section 262. (18) If the scheme has received the approval of the requisite majority of the creditors and also of the shareholders, if applicable, in accordance with sub-section (2) of section 262, the Tribunal may sanction the scheme with modifications, if any, in pursuance of sub-section (3) of section 262 and the order sanctioning the scheme shall be in Form No. RNR No. 17 and a copy of the scheme duly bearing the seal of approval of the Tribunal shall be enclosed to the order. (19) Within thirty days of the passing of the order sanctioning the scheme, the sick company or other companies involved in the scheme shall file a certified copy of the order with each Registrar of Companies having jurisdiction over the registered office of the respective companies. (20) The company administrator shall preserve all the books and records of the sick company including all the notices, memos, vouchers, attendance slips, proxy forms, letters, correspondence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , payments received, payment made, particulars of bank account/s operated, bank statements, reconciliation statements, valuation reports, title deeds, copies of public notices issued, and all other papers unless otherwise ordered to be disposed of by the Tribunal and he shall hand over the records to the company or the liquidator, as the case may be, before demitting the office. (21) The tribunal on its own or on an application of any secured creditor, the sick company or the transferee company, where the scheme of revival and rehabilitation involves amalgamation, if it is satisfied that the conduct of the company administrator was not fair and reasonable in the facts and circumstances obtained at that time when such question had arisen, it may, by order, terminate the office of the company administrator and appoint in his place another person and give such company administrator such time as may be necessary for meeting the objectives of the Act. (22) Where the company administrator has not been able to perform or has become incapable of performing his duties due to his health or death or any other reason, the Tribunal may on its own or on the application of any interested pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty, appoint another person in his place who shall take charge of all records and properties from the previous incumbent as far as may be possible and either commence his duties de novo or continue from the stage before his appointment upon such terms and directions as the Tribunal may impose or enforce, from time to time. (23) The Tribunal may, while sanctioning a scheme of revival or rehabilitation, on its own or on an application of any person interested in the scheme, including an objector who is bound by the scheme despite his objections, made prior to the sanctioning of the scheme, direct the enforcement or modification or termination of any contract or agreement or any obligation pursuant to such contract or agreement entered into by the sick company with any other person and such enforcement or modification or termination shall be specified in its order sanctioning the scheme: Provided that the Tribunal may give reasonable opportunity of being heard to the affected parties. (24) The Tribunal may, while sanctioning a scheme of revival or rehabilitation, on its own or on an application of any person interested in the scheme, including an objector who is bound by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme despite his objections, made prior to the sanctioning of the scheme, direct the company administrator to continue to be in office until effective implementation of the scheme and his remuneration and other terms and conditions for such continuance shall be determined by the Tribunal and specified in its order sanctioning the scheme. 33. Implementation of the scheme. For the purposes of sub-section (4) of section 264, no such application shall be accepted unless it is made in Form No. RNR No. 18 and is accompanied by (1) the fee prescribed in Schedule of Fees; (2) a copy of the approved scheme of revival and rehabilitation duly certified by the company administrator; (3) a copy of the audited financial statements of the sick company for the financial year immediately preceding the date of the application; (4) any other document which the applicant may consider necessary for proper adjudication of the matter; (5) reasons for non-implementation of the sanctioned scheme or failure of the scheme; (6) modification as may be suggested or other relief, if any, sought from the Tribunal. 34. Winding up of company on report of company administrator. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - For the purposes of sub-section (1) of section 265, where the scheme is not approved in the manner specified under sub-section (2) of section 262, the company administrator shall submit a report to the Tribunal within fifteen days of the meeting concerned in Form No. RNR 19 and upon receipt of a report, after making such enquiries as it may deem fit, the Tribunal shall by order, direct the winding up of the sick company. 35. Databank of interim administrators or company administrators.- (1) For the purposes of sub-section (1) of section 259, a databank shall be maintained by the Central Government, The Institute of Chartered Accountants of India or The Institute of Company Secretaries of India or The Institute of Cost and Works Accountants of India or Bar Council of India or any other institute or agency authorized by the Central Govt. by an order consisting of the names of Chartered Accountants in practice, Company Secretaries in practice, Cost Accountants in practice and Advocates and such other professionals as may be approved by the Central Government. (2) No person shall be included in the databank aforesaid, unless he has: (i) proven ability, integrity and sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding having special knowledge or experience of not less than 7 years in commercial/corporate/financial/insolvency laws, finance, management or administration, debt restructuring, business or industrial reconstruction, investment, accountancy, or such other disciplines related to management which will be useful for conduct of affairs of the sick company and its revival and rehabilitation; (ii) free from any professional or other mis-conduct, past and present, committed under the respective statute under which such professional is governed; (iii) met the fit and proper person criteria specified by the Central Government from time to time (3) The databank referred to in sub rule (1) shall contain the following details in respect of such persons included in the databank to be eligible and willing to be appointed as administrator i. the name and surname in full; ii. the father s name; iii. the date of birth; iv. gender; v. nationality; vi. occupation; vii. full address with PIN code (present and permanent); viii. phone number; ix. e-mail Id; x. educational and professional qualifications; xi. experience or expertise, if any; xii. any le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal proceedings initiated or pending against such person; xiii. list of partnerships in which he is or was associated with a. name of the partnership; b. nature of industry; and c. duration with dates. xiv. list of companies in which he is or was associated with a. name of company; b. nature of industry; and c. duration with dates. (4) Any person who desires to get his name included in the databank shall make an application, along with such fees as may be prescribed, to the Central Government or any institute or agency authorized by the Central Government. (5) Any person who has applied for inclusion of his name in the databank or any person whose name appears in the databank shall inform about any changes in his particulars within fifteen days from such change. (6) The databank posted on the website shall (a) be accessible at the specified website; (b) be substantially identical to the physical version of the database; (c) be searchable on the parameters specified in sub-rule (3); (d) contain a link to obtain the software required to view or print the same subject to payment of specific charge. 36. Rehabilitation and Insolvenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Fund. - (1) In pursuance of sub-section (4) of section 269, the Central Government shall appoint, including on deputation basis, a person, not below the rank of Senior Administrator Grade Officer, as the Administrator to the Rehabilitation and Insolvency Fund (hereinafter referred to as the fund ) on the following terms and conditions, namely:- (i) the appointment of the administrator shall be notified in the Official Gazette; (ii) the administrator shall hold office for a period of five years and the Central Government may re-appoint the same person as the administrator of the fund for a further period of not more than three years at one time; (iii) any vacancy arising out of resignation, retirement, death of an administrator or for any other reason shall be filled by the Central Government as a fresh appointment; (iv) the terms of the service of the Administrator shall be in accordance with the applicable rules of the Central Government or as may be approved by the Central Government; (v) the Administrator shall be assisted by such number of officers and staff, appointed by the Central Government either through deputation or on contract or permanently, as may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered necessary by the Central Government in accordance with the Central Government policies, rules and regulations. (2) The Administrator shall manage the fund and perform such other functions related to the management of the fund as may be assigned by the Central Government from time to time; (3) The Administrator shall be responsible for the administration of the Fund established under sub-section (1) of section 269 for the purposes of carrying out the objects for which the Fund is established. (4) For the purposes of crediting any amount as a deposit from any company under clause (b) of sub-section (2) of section 269, challan shall be used and payment as specified therein shall be made directly to the account styled as Rehabilitation and Insolvency Fund maintained by Central Government in designated branches of State Bank of India or any other nationalised bank and such remittance may be made from any branch of any bank through electronic payment facility. (5) For the purpose of crediting any amount to the Fund from any other source under clause (c) of sub-section (2) of section 269, challan in shall be used and payment as specified therein shall be made dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly to the account styled as Rehabilitation and Insolvency Fund maintained by Central Government as per designated bank/branches as specified in sub-rule (4) above. (6) The utilization of funds withdrawn out of the Rehabilitation and Insolvency Fund may be utilized for making payments to workmen, protecting the assets of the company or meeting the incidental costs during the proceedings. (7) For the purpose of withdrawing any amount under sub-section (3) of section 269 out of any amount already deposited by any company under clause (b) of sub-section (2) of section 269, an application maybe made by any person authorized to do so by the Tribunal and no such withdrawal shall be allowed unless the company has been declared as a sick company and in respect of which an interim administrator or company administrator has been appointed or an order for winding up of the company has been made in pursuance of Chapter XIX or XX of the Act and no fee shall be payable for this application. (8) The Tribunal shall consider such applications as expeditiously as may be possible but in any case an application shall be disposed of within twenty-one days of the making of such application. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (9) The Administrator shall ensure maintenance of separate and proper accounts and other relevant records in relation to the Fund giving therein the details of all receipts to and, expenditure and refund from, the Fund and other relevant particulars (company-wise) for proper administration of the Fund. (10) The accounts of receipts in and payments from the fund shall be reconciled with the bank statements on monthly basis and any discrepancy shall be reported to the Central Government immediately on discovery of the discrepancy. (11) The accounts shall be kept and maintained for a period at least eight years from the end of the financial year to which it relates. (12) The Administrator shall cause to draw at the end of each Financial Year, a statement of total receipts from various sources indicated in sub section (2) of section 269 and total payments on expenditures as indicated in sub-section (3) of section 269. (13) The Administrator shall have power to make investments of the Fund as and when considered necessary in the securities approved by the Central Government. (14) The accounts of the fund shall be audited by the Comptroller and Auditor-General at such int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervals as may be specified by him and such accounts as certified by the Comptroller and Auditor-General together with the audit report shall be forwarded annually to the Central Government by the Administrator and the Central Government shall place the same before the Parliament. (15) Wherever the rules made for the purpose of appointment, functioning, and staffing of the Administrator or for maintenance of accounts and audit thereof, are silent, the relevant rules of the Central Government shall be applicable. 37. Applicability of Rules. These Rules shall be in addition to and not in derogation to the National Company Law Tribunal Rules, 2016. - News - Press release - PIB Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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