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Tutorial-4 How the BIFR will operate the sick company ?
Tutorial-4 How the BIFR will operate the sick company ?
Hey guys. In my last article we talked about What is BIFR. Now we will talk after diagnosis of the sickness how the BIFR shall operate the sick company. There is some set pattern used by BIFR to understand the sick company and how it can be treated. First of all BIFR will conduct inquiries about the sick company and understand what is the basic background of the company.
BIFR would make an inquiry as it may deem fit for determining whether any industrial company had become sick, under the following conditions:-
- If the Board of Directors of a sick industrial company made a reference to the BIFR for determination of the remedial measures with respect to their company. Such reference was to be made within sixty days from the date of finalisation of the duly audited accounts of the company for the financial year at the end of which the company had become sick. For filing the reference, the Board of Directors must have sufficient reasons to form the opinion that the company had become sick; or
- On receiving such information (reference) with respect to a sick company or upon its own knowledge as to the financial condition of a company. Such a reference to the board may be made by:-
- (i) The Central Government;
- (ii) The Reserve bank of india;
- (iii) State Governments;
- (iv) Public financial institutions;
- (v) State level institutions; or
- (vi) Scheduled banks.
However, such a reference shall not be made in respect of any industrial company by :-
(i) the Government of any State, unless all or any of the industrial undertakings (belonging to such a company) were situated in that State;
(ii) a public financial institution or a State level institution or a scheduled bank, unless it had, by reason of any financial assistance or obligation rendered by it or undertaken by it, interest in such a company.
The Board may order any operating agency to enquire into the matter and complete the inquiry as expeditiously as possible.
If the Board(BIFR) deems it fit to make an inquiry or to cause an inquiry to be made into any industrial company, it may appoint one or more persons as special director(s) of the company for safeguarding the financial and other interests of the company.
The appointment of a special director shall be valid and effective notwithstanding anything to the contrary contained in the Companies Act, 2013 or in any other law for the time being in force or in the memorandum and articles of association or any other instrument relating to the industrial company.
