In a press release dated 4th February, 2020 by the Press Information Bureau, Government of India, has issued a list of amendments, recommended by the Company Law Committee (“Committee”) set up by the Ministry of Corporate Affairs in September, 2019 to further decriminalise provisions of the Companies Act, 2013 (“Act”).
Please find below a list of amendments, recommended by the Committee with reference to 43 penal provisions of the Act:
- Re-categorization of 23 offences out of 66 remaining compoundable offences in The Act, which must be dealt with in-house adjudication framework wherein these defaults would be subject to a penalty levied by an adjudicating officer. Also, the quantum of penalties recommended are lower than the fines currently under The Act.
- Omitting 7 compoundable offences, limiting punishments for 11 compoundable offences to a fine by removing the provision/s of imprisonment and 5 offences should be dealt under alternative framework.
- Reduction in the quantum of penalty with respect to 6 provisions, which were shifted to the in-house adjudication framework through the recent amendments made in The Act.
- Retaining the status-quo in relation to the non-compoundable offences.
The Companies (Amendment) Act, 2019, had made changes in the Act to convert 16 criminal offences into civil wrongs.
In continuation of the Government’s endeavour in line with such amendments, the Committee was set up to further decriminalise provisions of the Act based on their gravity and to take other concomitant measures to provide further ease of living for corporates in the country.
Recommendations were made by the committee for amendments in the Act to remove criminality in case of procedural defaults, technical defaults and defaults which can be determined objectively and defaults which otherwise lack the element of fraud or do not involve larger public interest.
Source: Press Information Bureau, Government of India