Multiple choice

A company is said to be "sick" when the accumulated loss at the end of any financial year leads to erosion of per cent of………………..its net worth.

  1. 100%

  2. 75%

  3. 50%

  4. 25%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

According to the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), a company is defined as 'sick' when its accumulated losses erode 50% or more of its peak net worth. This 50% threshold is the legal criterion used to identify industrial sickness in India. The concept focuses on the extent of capital erosion rather than just absolute loss amounts. Companies meeting this threshold can be referred to BIFR for potential revival schemes.

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