Sick Industrial Companies Act (SICA)
What Is the Sick Industrial Companies Act (SICA)?
The Sick Industrial Companies Act of 1985 (SICA) was a key piece of legislation dealing with the issue of wild industrial sickness in India. The Sick Industrial Companies Act (SICA) was enacted in India to identify unviable ("sick") or possibly sick companies and to assist with their restoration, if conceivable, or their closure, if not. This measure was taken to deliver investment locked up in unviable companies for useful use somewhere else.
Understanding the Sick Industrial Companies Act (SICA)
The Sick Industrial Companies Act (SICA) was enacted in 1985 to address an ongoing issue in the Indian economy: industrial sickness.
The act characterized a sick industrial unit as one that had existed for no less than five years and had incurred accumulated losses equivalent to or surpassing its whole net worth toward the finish of any financial year.
Reasons for Industrial Sickness
The Sick Industrial Companies Act (SICA) distinguished a number of internal and outside factors responsible for this scourge. Internal factors inside the organizations included mismanagement, misjudgment of demand, wrong location, poor project implementation, inappropriate expansion, personal excess, inability to modernize and poor work management connections. Outer factors incorporated an energy crisis, raw materials shortage, infrastructure bottlenecks, deficient credit facilities, innovative changes, and global market powers.
Industrial Sickness and the Economy
Boundless industrial sickness impacts the economy in a number of ways. It can bring about loss of government revenue, tying up scant resources in sick units, expanding non-performing assets held by banks and financial institutions, expanding unemployment, loss of production and poor productivity. SICA was executed to amend these adverse financial outcomes.
SICA Legislation and Provisions
An important SICA provision was laying out two semi legal bodies-the Board for Industrial and Financial Reconstruction (BIFR), and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). BIFR was set up as a zenith board to lead taking care of the industrial sickness issue, including resuscitating and restoring possibly sick units and liquidating non-reasonable companies. AAIFR was set up to hear requests against BIFR orders.
Annulment of the Sick Industrial Companies Act
SICA was revoked and supplanted by the Sick Industrial Companies (Special Provisions) Repeal Act of 2003, which diluted some SICA provisions and stopped certain provisos. A key change in the new act was that apart from combating industrial sickness, it expected to reduce its developing incidence by guaranteeing that companies didn't resort to a sickness declaration just to escape legal obligations and gain access to concessions from financial institutions.
The cancelation of SICA came into full effect on December 1, 2016. It was fully revoked, in part, since a portion of its provisions covered with the Companies Act of 2013. The Companies Act incorporated the creation of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). The NCLT can hear cases connected with the management of a company, mergers, and restorations of companies, among different issues. Adding to the NCLT's authority is the Insolvency and Bankruptcy Code of 2016, which states that corporate insolvency processes can be initiated before the NCLT.
Features
- The Sick Industrial Companies Act of 1985 (SICA) was an Indian law enacted to recognize unviable ("sick") companies that could present systematic financial risk.
- SICA was canceled and supplanted in 2003 by the Sick Industrial Companies (Special Provisions) Repeal Act of 2003, which watered down certain parts of the original Act and fixed a few tricky factors.
- SICA was then fully revoked in 2016, in part since a portion of its provisions covered with the provisions of a separate Act, the Companies Act of 2013.
