The Hindu Business Line : Outsourcing mooted for carrying out liquidation proceedings

The Ministry for Company Affairs has mooted that the official liquidators (OLs) attached to High Courts may consider outsourcing their work to professionals such as chartered accountants, valuers and advocates.

Concerns have been raised by stakeholders on the state of affairs in the offices of OL and various shortcomings in their functioning.

In bid to strengthen the hands of OLs for carrying out liquidation proceedings in a more efficient manner, the Government has suggested that they could outsource work such as preparation of statement of accounts, valuation certificates, and inventory taking to the professionals with the Courts' approval.

Once an order of winding up is passed, it is the duty of the ex-management to file the statement of affairs with OL giving details of assets and liabilities of the company within the prescribed time. It was noted that in most cases, the statement of affairs was not filed within the stipulated time frame.

Though the OL files a criminal prosecution with the Court against the ex-directors in most cases it was found difficult to locate the director's whereabouts, sources explained.

Difficulties were also faced in compiling up to date statement of accounts, which is important to understand the company's state of affairs. In fact, some of the OLs did take help of the CAs and authorised valuers to prepare the statement of affairs and inventory of assets, sources added.

At the recently concluded conference of OLs and Regional Directors (RDs) held by the Ministry, there was a general consensus that certain work of the OLs office could be outsourced with the permission of the Court.

Mr Prem Chand Gupta, Minister for Company Affairs, told Business Line that OLs should organise their manner of working to enable fast completion of liquidation proceedings, so that investments are recycled and reinvested into the economy for further growth and development of the country. The official liquidators are Government officials attached to the Courts.

Currently, there are more than 5,700 companies under liquidation.

The Minister pointed out that the Government has already brought amendments in the Companies Act, 1956 to streamline the liquidation proceedings.

Accordingly, a new institutional framework is envisaged in the form of the National Company Law Tribunal (NCLT).

The provisions relating to the winding up and liquidation of companies will be transferred from high courts to the NCLT.

Regarding protection of property under their possession, the OLs have been directed to prepare a panel of reputed security agencies with the approval of the Court.

More Stories on : Regulatory Bodies & Rulings | Non-Performing Assets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page