The repeal of the Sick Industrial Companies (Special Provisions) Act, 1985 and amendments to the Companies Act, 1956 approved by the Cabinet yesterday have left it for the government to exempt sick public sector undertakings from reference to the proposed National Company Law Tribunal.
The Bill, likely to be introduced in Parliament next week, however, makes it mandatory for all other companies to be referred to NCLT on turning sick.
The Bill defines sick company as one whose accumulated losses at the end of a financial year are 50 per cent or more than its net worth in any one or more of the four years immediately preceding that financial year or if it fails to repay debts within the three consecutive quarters to its creditors.
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Senior government officials said that in the case of PSUs, invariably a demand for central funding crops up.