The Lok Sabha on Saturday passed the Companies Act (Amendment) Bill, 2020, which decriminalises a number of technical and filing-related corporate offences. It also allows direct listing of Indian companies on foreign stock exchanges and revokes the criminal provisions added to the Companies Act for violations of provisions of corporate social responsibility rules.
The Bill is set to replace an Ordinance that has already brought these changes into effect.
It also looks to promote ease of doing business.
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 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.
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.
– With PTI
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