Taskforce recommends easy exit for dying companies
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KATHMANDU, DEC 29 -
Companies wanting to close down will now get an easy exit with the report of the Sick Industry Rehabilitation High Level Taskforce recommending that dying companies be allowed to fold with the least hassle.
Currently, shutting down a company has been one of the most complicated parts of the Company Act. The report that was submitted to Prime Minister Baburam Bhattarai on Monday has asked the government to provide an easy exit to terminally sick firms by giving them two years’ time to do it.
“Business enterprises which have declined to such a state that they are beyond restoration should be given an easy way out as it is the only way to address them,” reads the report.
Besides recommending an easy exit for non-functioning firms, the taskforce has urged providing rehabilitation packages of a longer duration for sick companies and those about to sink depending on the severity of their need.
National Planning Commission Vice-Chairman and coordinator of the taskforce Dipendra Bahadur Kshetri said that they had submitted the report to the prime minister which contains practical recommendations to revive sick enterprises. The report
has also asked the government to provide packages of three
to five years for the rehabilitation of sick firms arguing
that they can be revived if the government gives them
special care. “We have recommended to the government to provide them low interest
credit and tax exemption
and go easy on them with regard to their earlier loans,” said Kshetri.
According to the report, companies that are suffering from high interest rates, power shortage and crippling industrial environment should be categorized as sick companies. “The government should provide soft loans to such firms for at least a year to bolster their self-confidence,” reads the report.
Kshetri said that putting all the sick companies in the same basket was a mistake and added, “Since they have various reasons for becoming sick and their sickness varies in
degree, they should be treated differently.”
The report has also suggested developing a fund at the Ministry of Industry (MoI) to provide them incentive packages. Senior officials at the MoI confirmed that internal discussions were going on to create such a fund. However, he said that the ministry was yet to decide the size of the fund.
“As the recommendations are quite practical, we will begin implementing them soon,” said Industry Secretary Umakant Jha. “As they become effective in the long run, the recommendations will eventually be incorporated in the national industrial policy.”
So far, 25 companies have approached the MoI to be declared sick and ask for incentives. Similarly, the NPC and the FNCCI have received such requests from 13 and 25 firms respectively. Industrialist Manish Agrawal said that the recommendations submitted by the high level taskforce were an effective tool to resolve the problems being faced by sick companies. “We are thankful that the taskforce has tabled remedies as per our recommendations,” said Agrawal.
Posted on: 2011-12-29 08:47
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