In 1981, the Governement of India set up a committee headed by Mr. Tiwari to suggest a comprehensive legislation to deal with the Industrial Sickness prevailed in the economy. Based on its report (submitted in 1983), the GoI enacted the Sick Industrial Companies Act in 1985 (SICA) and set up the Board for Industrial and Financial Reconstruction (BIFR) in 1987 with the objective of determining (early) the sickness and expedite the rivival of potentially viable firms and closure of unviable firms. It was expected that by rivival the idle investments in the viable firms will become productive and by closure the locked up investments in unviable firms will find their productive uses elsewhere.
What does it provide?
It works on the provision of timely detection of sick and potentially sick industrial companies, speedy determination and enforcement of preventive, remedial and other measures with respect to such companies. They do provide the legal protection for the speedy revival of viable and closure of the unviable firms. It facilitates the required financial assistance and also provides the managerial expertise.
What is the eligibility criteria?
- Firm to be reported to BIFR under SICA should be 5 years old after the incorporation.
- Accumulated loss of the firm has to be equal or more than its net worth (paid-up-capital + Reserves).
- Firm's workforce should exceed the minimum of # 50.
- It should have the legal status for its existance (license).
Curtesy of BIFR