Companies Act to focus on big errors

Govt to focus on offences involving listed companies and those relating to frauds.

The government is expected to waive a majority of the 45,000-odd pending Companies Act violations cases to focus on serious offences involving listed companies, companies accepting public deposits and those related to frauds.

The expert group headed by lawyer O P Vaish, scheduled to submit its report to the company affairs ministry on Wednesday, is expected to recommend a settlement scheme for cases relating to companies which are in active operation.

The committee thinks that cases of technical offences related to companies which are not in operation should be waived. In about 40 per cent of the cases, related to companies in operation, a settlement scheme on the lines of the Simplified Exit Scheme introduced earlier by the ministry would be recommended, sources said.

If the company affairs ministry goes ahead with the recommendation, about 95 per cent of the cases will be cleared and only serious cases will remain.

"The problem with the ministry has been that while cases have been piling up, the progress has been very slow at courts. This is compounded by the fact that even in minor cases the law specifies prosecution. By clearing away unimportant cases, the burden on courts will be reduced and the ministry will be able to focus on serious offences," an official said.

There are many cases which are pending for over 10 years. In all, the cases involve over 12,000 companies against which litigations are at various stages.

Most of the non-serious offences relate to non-filing of annual reports and non-intimation of various matters prescribed under the Act.

The expert group has members from the Institute of Chartered Accountants of India (ICAI) and the Institute for Company Secretaries of India (ICSI), besides ministry officials. BS Swaroop, member of the Settlement Commission for Income Tax, is also a member of the committee.

LIKELY CHANGES

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• Majority of the 45,000-odd pending violations cases under the Companies Act may be waived
• Most of the non-serious offences relate to non-filing of annual reports and non-intimation of various matters prescribed under the Act
• In about 40 per cent of the cases, related to companies in operation, a settlement scheme on the lines of the Simplified Exit Scheme expected