 "Parliament")
Lok Sabha on Saturday passed a bill to further amend the Companies Act and decriminalise various non-compoundable offences and promote ease of doing business.
The Companies (Amendment) Bill, 2020 -- which seeks to decriminalise various penal provisions and introduce a new chapter related to producer organisations in the legislation -- was passed by the Lower House.
Speaking on the bill, Finance and Corporate Affairs Minister Nirmala Sitharaman said decriminalisation of various provisions under the companies law will also help small companies by reducing the litigation burden on them.
Around 48 sections of the Companies Act, 2013 will be amended to decriminalise various offences.
Sitharaman said there are currently around 124 penal provisions compared to 134 in 2013 under the Companies Act. Stressing that there will be no relaxation for serious offences, including fraud and those that cause "injury to public interest or deceit", the minister said the number of "non-compoundable" offences under the Act remains the same at 35.
The bill was introduced in the Lower House by Nirmala Sitharaman in May, 2020.
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Generally, compoundable offences are those which can be settled by paying certain amount of money. There will also be a new chapter on producer organisation, the minister said, adding that it will be particularly helpful for farmer producer organisations. For promoting "ease of doing business," the minister said that 17 provisions will be amended.
The bill removes the penalties which apply for any change in the rights of a class of shareholders made in violation of the Act. Where a specific penalty is not mentioned, the Act prescribes a penalty of up to Rs 10,000 which may extend to Rs 1,000 per day for a continuing default.
It also removes imprisonment in certain offences. It removes the imprisonment of three years applicable to a company for buying back its shares without complying with the Act. The bill reduces the maximum fine for failure to file an annual return with the Registrar of Companies from Rs 5,00,000 to Rs 2,00,000.
The Bill empowers the central government to allow certain classes of public companies to list classes of securities (as may be prescribed) in foreign jurisdictions. It also allows exclusion of companies issuing specified classes of securities from the definition of a “listed company”.
In terms of Corporate Social Responsibility (CSR), the bill exempts companies with a CSR liability of up to Rs 50 lakh a year from setting up CSR Committees.
The bill was introduced in the lower house in May, 2020.
