Union Cabinet approves promulgation of IBC( Amendment ) Ordinance ,2019

The Union Cabinet on 24^th December, 2019 approved a proposal to promulgate an ordinance for the amendment of the Insolvency and Bankruptcy Code (IBC).The changes protect the ‘going concern status ‘of a company facing insolvency proceedings while providing protection to last –mile funding in financially distressed sectors.

·       The amendments absolve a corporate debtor of liability for an offence committed before the commencement of the corporate insolvency resolution process.

·       The corporate debtor will not be prosecuted for such an offence from the date the resolution plan has been approved by the adjudicating authority, if the resolution plan results in the change in the management or control of the corporate debtor to a person who was not a promoter or in the management or control of the corporate debtor or a related party of such a person.

·       The amendments also propose that the debtor will not be prosecuted if a person with regard to whom the relevant investigating authority has, on the basis of material in its possession, reason to believe that he had abetted or conspired for the commission of the offence, and has submitted a report or a complaint to the relevant statutory authority or court.

The Insolvency and Bankruptcy Code (Second Amendment Bill), 2019

The proposal to make amendments in the Insolvency and Bankruptcy Code , 2016 through the Insolvency  and Bankruptcy Code ( Second Amendment ) Bill 2019 has been approved by the Union Cabinet. These amendments aim to reduce certain difficulties being faced during insolvency resolution process to realise the objects of the code and to further ease of doing business.

The amendment Bill seeks to amend various sections and introduce a new section 32A in the Insolvency and Bankruptcy Code,2016 .

Key Highlights of the Bill

·     The code to remove bottlenecks, streamline the CIRP and grant protection to last mile funding which will boost investment in financially distressed sectors and ensure that the foundation of the business of corporate debtor is not lost, and it continues as a going concern by clarifying that the licenses, permits concessions clearances etc. cannot be terminated or suspended or not renewed during that moratorium period.

·     Insolvency Commencement date in all cases will mean the date of admission of application for initiating CIRP.

·      Minimum threshold for homebuyers to file insolvency application An application for initiating Insolvency shall be filed jointly by at least 100 allottees under a real estate project or not less than 10% of the total number of allottees whichever is less. Additional thresholds introduced for Financial Creditors represented by authorised representative due to large numbers in order to prevent frivolous triggering of Corporate Insolvency  Resolution Process

·    Clarification regarding initiation of CIRP by Corporate Debtor- The bill seeks to clarify that corporate debtor who is disqualified from making an application for CIRP initiation u/s 11(a) to (d), shall not be prevented from initiating CIRP against another corporate debtor.

·        Resolution Professional’s role after the expiry of CIRP Period-

The Amendment Bill has  clarified that the affairs of the Corporate Debtor during the time-gap between the period of conclusion of CIRP and implementation of the successful resolution plan/ commencement of liquidation shall now be the responsibility of the RP only.

·       A new section 32Ahas been inserted. The section operates on three fronts

i)               Cessation of liability of corporate debtor in respect of offences committed prior to the commencement of the CIRP.

ii)              Prohibition on any action against any property if the corporate debtor covered under the resolution plan.

iii)           Requirement from corporate debtor and other persons to extend assistance and cooperation to any investigating authority .

Highlights of Amendment in Indian Stamp Act, 1899

The Finance Bill, 2019 had proposed certain amendments in the Indian Stamp Act, 2019. The amendments are related to levy and administration of stamp duty on securities market instruments by the states at one place through one agency viz. stock exchanges or it’s clearing corporations or depositories. The agency will share collected stamp duty appropriately with respective states based on the state of domicile of the ultimate buying client.

The Highlights of the same are as follows:

• Inserted certain definition such as allotment list, securities, debentures, market value
• Definition of instruments is broadened to provide for documents in electronic form or otherwise created for a transaction in a stock exchange or depository
• Stamp duty is levied on transfer of securities in demat form.
• Stamp Duty is not applicable in case of Demat or Remat of Securities
• All the transactions (Issue, transfer of securities etc.) through stock exchanges and depositories are now under the purview of stamp duty in addition to issue/transfer of securities held physically.

The stamp duty will be collected by stock exchange/clearing corporation/depositories as the case may be, from issuer/seller at the time of settlement of transactions. The Applicable Rate for various transactions and who will be responsible for paying stamp duty is given in table below:

Transaction	Earlier Stamp Duty	Revised Stamp Duty
Securities other than Debentures
Issue of Security	As per State Stamp Act – 0.1% as per Maharashtra Stamp Act	0.005% [new Article 56A]
Transfer of securities on delivery basis	0.25% as per Indian Stamp Act [earlier Article 62(a)]	0.015%
Transfer of securities on non-delivery basis	0.25% as per Indian Stamp Act [earlier Article 62(a)]	0.003%
Debentures
Issue of Debentures (Marketable)	As per State Stamp Act – As per Maharashtra Stamp Act - Under Article 1 -Acknowledgement of Debt – Rs. 100 for value Rs. 10 lakhs or more	On delivery basis – 0.015% [new Article 56A] On non-delivery basis – 0.003% [new Article 56A]
Issue of Debentures (Non - Marketable)	No stamp duty prescribed
Derivatives
Futures (equity and commodity)	No stamp duty prescribed	0.002%
Options  (equity and commodity)	No stamp duty prescribed	0.003%
Currency and Interest rate derivatives	No stamp duty prescribed	0.0001%
Other Derivatives	No stamp duty prescribed	0.002%
Repo on Corporate Bonds	No stamp duty prescribed	0.00001%
Government Securities	No stamp duty prescribed	0%

Who will be responsible for paying stamp duty?

Transaction	Instrument Chargeable	Who will pay stamp duty?	Who will collect stamp duty?
Sale through Stock Exchange	Clearance List	Buyer	Stock Exchange or Clearing Corporation authorised by it
Transfer of securities by a Depository	delivery instruction slip	Transferor	Depository
Issue of securities, any creation or change in the records of a depository	Allotment list	Issuer	Depository
Issuance of securities otherwise than through a stock exchange or depository	Share Certificate	Issuer	Depository
Sale / Transfer or re-issue of securities with consideration otherwise than through a stock exchange or depository	Share Transfer Deed	Transferor	Depository

The amendments proposed in Stamp Act, 1899 through Finance Bill, 2019 made effective from 9^th January, 2020.[1]

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[1] Notified vide notification no. S.O. 4419(E) dated 10th December, 2019