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PIB – November 19 , 2019

GS-2nd Paper

Topic– Important International institutions, agencies and fora- their structure, mandate.

Kimberley Process Certification Scheme (KPCS)

Context

The Plenary meeting of the Kimberley Process Certification Scheme (KPCS) is being hosted by India, in New Delhi.

What is the Kimberley Process?

  • It is an international certification scheme which came into force in 2003 to regulate trade in rough diamonds.
  • The Kimberley Process (KP) unites administrations, civil societies, and industry in reducing the flow of conflict diamonds – ‘rough diamonds used to finance wars against governments’ – around the world.
  • It aims to prevent the flow of conflict diamonds, while helping to protect legitimate trade in rough diamonds.

Kimberley and India

  • India is founding member of KPCS.
  • India is currently the Chair of Kimberley Process Certification Scheme (KPCS) since 1st January 2018.
  • It was handed Chairmanship by the European Union during KPCS Plenary 2018, which was held in Brussels, Belgium.
  • The chair oversees the implementation of The Kimberley Process Certification Scheme (KPCS) and operations of the working groups, committees and administration that activate The KP.

Key Features of KPCS

  • The Kimberley Process is also described in the United Nation Security Council (UNSC) Resolutions.
  • The Kimberley Process Certification Scheme (KPCS) outlines the rules that govern the trade in rough diamonds. T
  • KPCS has developed a set of minimum requirements that each participant must meet.
  • The KP is not an international organization. It has no permanent offices or permanent staff.
  • It relies on the contributions – under the principle of ‘burden-sharing’ – of participants, supported by industry and civil society observers.
  • The Kimberley Process (KP) is a binding agreement that imposes extensive requirements through the national legislations of its participants.

Conflict diamonds

  • “Conflict Diamonds” means rough diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments.
  • It is also known as ‘blood’ diamonds.
  • The KP defines conflict diamonds as ‘rough diamonds used to finance wars against governments’ – around the world.

How does KPCS work?

  • The Kimberley Process Certification Scheme (KPCS) imposes extensive requirements on its members to enable them to certify shipments of rough diamonds as ‘conflict-free’.
  • It prevents conflict diamonds from entering the legitimate trade.
  • Participating states must put in place national legislation and institutions; export, import and internal controls; and also commit to transparency and the exchange of statistical data.
  • Participants can only legally trade with other participants who have also met the minimum requirements of the scheme.
  • The international shipments of rough diamonds must be accompanied by a KP certificate guaranteeing that they are conflict-free.

GS-2nd Paper

Topic-  Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Insolvency and Bankruptcy Code

Context

As per the information received from National Company Law Tribunal (NCLT), 1,821 cases filed by homebuyers against builders under the Insolvency and Bankruptcy Code.

What is Insolvency and Bankruptcy Code?

  • The Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy law of India which seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy.
  • This was enacted for reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of the value of assets of such persons.

Aim of the Insolvency and Bankruptcy Code

  • The Insolvency and Bankruptcy Code 2016, provides for a time-bound process to resolve insolvency.
  • When a default in repayment occurs, creditors gain control over the debtor’s assets and must make decisions to resolve insolvency within a 180-day period.
  • To ensure an uninterrupted resolution process, the Code also provides immunity to debtors from resolution claims of creditors during this period.
  • The Code also consolidates provisions of the current legislative framework to form a common forum for debtors and creditors of all classes to resolve insolvency.
  • It Consolidate and amend all existing insolvency laws in India.
  • It aims to promote entrepreneurship.
  • To get the necessary relief to the creditors and consequently increase the credit supply in the economy.
  • To set up an Insolvency and Bankruptcy Board of India.

Agencies involved in insolvency resolution under the Code

  • National Company Law Tribunal (NCLT) – The adjudicating authority (AA), has jurisdiction over companies, other limited liability entities.
  • Debt Recovery Tribunal (DRT)- has jurisdiction over individuals and partnership firms other than Limited Liability Partnerships.
  • The Insolvency and Bankruptcy Board of India (IBBI) – apex body for promoting transparency & governance in the administration of the IBC; will be involved in setting up the infrastructure and accrediting IPs (Insolvency Professionals (IPs) & IUs (Information Utilities).
  • The Insolvency Professionals– These professionals will administer the resolution process, manage the assets of the debtor, and provide information for creditors to assist them in decision making.
  • Insolvency Professional Agencies– insolvency professionals will be registered with insolvency professional agencies. The agencies conduct examinations to certify insolvency professionals and enforce a code of conduct for their performance.
  • Information Utilities– Creditors will report financial information of the debt owed to them by the debtor. Such information will include records of debt, liabilities and defaults.

Insolvency and Bankruptcy Code (Amendment) Bill 2019

  • The Insolvency and Bankruptcy Code (Amendment) Bill, 2019 amends the Insolvency and Bankruptcy Code, 2016.
  • The Code provides a time-bound process for resolving insolvency in companies and among individuals.
  • Under the Code, a financial creditor may file an application before the National Company Law Tribunal (NCLT) for initiating the insolvency resolution process.
  • The NCLT must find the existence of default within 14 days.
  • Thereafter, a Committee of Creditors (CoC) consisting of financial creditors will be constituted for taking decisions regarding insolvency resolution.
  • The CoC may either decide to restructure the debtor’s debt by preparing a resolution plan or liquidate the debtor’s assets.
  • The CoC must approve a resolution plan, and the resolution process must be completed within 180 days. This may be extended by a period of up to 90 days if the extension is approved by NCLT.
  • If the resolution plan is rejected by the CoC, the debtor will go into liquidation.

The Bill addresses three issues.

  • First- it strengthens provisions related to time-limits.
  • Second- it specifies the minimum payouts to operational creditors in any resolution plan.
  • Third– it specifies the manner in which the representative of a group of financial creditors (such as home-buyers) should vote.

GS-2nd Paper

Topic-  Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Company Law Committee

Context

Company Law Committee-2019 submits its report to Finance Minister

About

  • The Company Law Committee was constituted by the Ministry of Corporate Affairs in September, 2019.
  • It was aimed to further decriminalise the provisions of the Companies Act, 2013 based on their gravity.
  • It was to take other concomitant measures to provide further Ease of Living for corporates in the country.
  • Shri Injeti Srinivas, Secretary, Ministry of Corporate Affairs, chaired the Committee.

About Company Law Committee

  • Government of India has constituted Company Law Committee in September 2019.
  • It was aimed for examining and making recommendations on various provisions and issues pertaining to implementation of the Companies Act, 2013 and the Limited Liability Partnership Act, 2008.

The terms of reference

  • To analyze whether any of the offences could be re-categorized as ‘civil wrongs’ along with measures to optimize the compliance requirements under the Companies Act, 2013 and concomitant measures to provide further Ease of Doing Business;
  • Examine the feasibility of introducing settlement mechanism, deferred prosecution agreement, etc., within the fold of the Companies Act, 2013;
  • Study the existing framework under the Limited Liability Partnership Act, 2008 and suggest measures to plug the gaps;
  • Propose measures to further de-clog and improve the functioning of the NCLT; and
  • Suggest measures for removing any bottlenecks in the overall functioning of the statutory bodies like SFIO, IEPFA, NFRA, etc. under the Act.

The main recommendations of the Committee

  • re-categorising 23 offences out of the 66 remaining compoundable offences under the Act, to be dealt with in the in-house adjudication framework wherein these defaults would be subject to a penalty levied by an adjudicating officer.
  • In addition, the quantum of penalties recommended is lower than the quantum of fines presently provided in the Act.
  • Omitting, altogether, 7 compoundable offences; limiting punishment for 11 compoundable offences to only fine by removing provision for imprisonment and recommending that 5 offences be dealt under alternative frameworks;
  • Reducing the quantum of penalties in respect of 6 provisions, which were shifted to the in-house adjudication framework through the recently passed Companies (Amendment) Act, 2019;
  • Retention of status-quo in case of the non-compoundable offences.
  • Power to exclude certain class of companies from the definition of ‘listed company’, mainly for listing of debt securities, in consultation with SEBI;
  • Clarifying the trial court’s jurisdiction on the basis of place of commission of offence under Section 452, for wrongful withholding of property of a company by its officers/employees;
  • Extending exemptions from filing of certain resolutions to certain classes of non-banking financial companies under Section 117 in consultation with RBI;
  • Providing power to enhance the thresholds which trigger applicability of Corporate Social Responsibility provisions;
  • Non-levy of penalties for delay in filing the annual returns and financial statements in certain cases.

For Prelims

The Roar of the Sea

Context

Joint Exercise between the Qatari Emiri Navy and the Indian Navy Forces (the Roar of the Sea)

Highlights

  • The Roar of the Sea is Joint Exercise between the Qatari Emiri Navy and the Indian Navy Forces.
  • The inaugural edition of the Bilateral Maritime Exercise Za’ir-Al-Bahr (Roar of the Sea) being conducted in Doha, Qatar.
  • The Exercise will include a three-day Harbour Phase and Two days Sea Phase.
  • The Sea Phase will include a Tactical Maritime Exercise involving the domains of Surface Action, Air Defence, Maritime Surveillance and Interdiction Operation and anti-terrorism.
  • India and Qatar have traditionally enjoyed warm and friendly relation, sharing common developmental and cultural values.
  • The inaugural edition of the Bilateral Maritime Exercise between the two navies would further strengthen the robust defence co-operation between the two countries, Especially in the fight against terrorism, maritime piracy and maritime security.

 

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