Company Law Committee-2019 submits its report to Finance Minister

News:The Company Law Committee which was constituted by the Ministry of Corporate Affairs has submitted its report.

Facts:

About the company law committee:

• Government of India had constituted the company law committee for examining and making recommendations on various provisions and issues related to implementation of the Companies Act.
• The committee consists of 11-members which is chaired by the Ministry of Corporate Affairs(MCA) secretary Injeti Srinivas.
• The committee has submitted its recommendations on offences both compoundable and non-compoundable which could be recategorised as civil offences under the Companies Act, 2013.
• The committee has also proposed measures to improve the functioning of the National Company Law Tribunal.

Key recommendations of the committee:

• Recommended changes in the 46 penal provisions so as to remove criminality or to restrict punishment to only fine or to allow rectification of defaults through alternative methods.
• Re-categorising 23 offences out of the 66 remaining compoundable offences under the Companies Act.
• These offences will be dealt with in the in-house adjudication framework wherein these defaults would be subject to a penalty levied by the adjudicating officer.
• Retention of the status-quo in case of the non-compoundable offences.
• Extending applicability of Section 446B (lower penalties for small companies and one person companies) to all provisions which attract monetary penalties and extending the benefit to producer companies and start-ups.
• Proposing new benches of the National Company Law Appellate Tribunal(NCLAT)
• Providing for appeal against the orders of the Regional Directors before the NCLT after due examination.

Additional information:

About Compoundable and non-compoundable offences:

• Compoundable offences are those that are punishable with a fine or with a fine or imprisonment or both.
• Non-compoundable offences are those offences which are punishable with imprisonment only or punishable with imprisonment and fine.

About Companies Act,2013:

• The Companies Act 2013 is an Act of the Parliament of India on Indian company law.Company means a company incorporated under this Act or under any previous Company Law.
• The law regulates incorporation of a company, responsibilities of a company, directors and dissolution of a company.

About NCLT:

• National Company Law Tribunal (NCLT) is a quasi-judicial body that governs the companies in India.It was established under the Companies Act, 2013 and is a successor body of the Company Law Board.
• NCLT has the same powers as assigned to the (a)erstwhile Company Law Board (which are mostly related to dealing with oppression and mismanagement) (b)Board for Industrial and Financial Reconstruction (BIFR)(revival of sick companies) and (c)powers related to winding up of companies (which was available only with the High Courts.

About NCLAT:

• National Company Law Appellate Tribunal (NCLAT) was constituted under the Companies Act, 2013.
• It was established for hearing appeals against the orders of (a) National Company Law Tribunal(s) (NCLT) (b)Insolvency and Bankruptcy Board of India and (c)Competition Commission of India (CCI).