Extending relaxations to companies, Finance Minister Nirmala Sitharaman on Sunday announced violations of Companies Act involving minor technical and procedural defaults would be decriminalised. These include shortcomings in reporting of corporate social responsibility, inadequacies in board report, filing defaults, delay in holding annual general meetings. Follow key Highlights of Nirmala Sitharaman’s speech today
The Companies Act 2013 regulates incorporation of a company, responsibilities of a company, directors, dissolution of a company. Unveiling the fiftha and last tranche of Covid economic package targeted at building a ‘self-reliant country’, Sitharaman said seven compoundable offences would be dropped altogether and five would be dealt under alternative framework.
A majority of the compoundable offences sections would now be adjudged internally, she said adding that powers of Regional Director for compounding would also be enhanced from dealing with 18 sections to 58. All these amendments in the Companies Act would help de-clogging the criminal courts and National Company Law Tribunal, Sitharaman opined.
She also announced to have increased the minimum threshold to initiate insolvency proceeding from Rs 1 lakh to Rs 1 crore and said that a special insolvency resolution framework for Micro, small and medium (MSME) enterprises under Section 240A of the Code would be notified soon. All Covid-related debts would also be excluded from the ‘default’ section under the Code to trigger insolvency proceedings, she added.
Meanwhile, fresh initiation of insolvency proceedings would remain suspended up to one year depending on the coronavirus situation, Sitharaman stated.