Government to decriminalise 2/3rds of offences under the Companies Act

News:The Union government is all set to do away with jail term in over 40 of the 66 sections under the Companies Act 2013.These changes are being discussed by the Company Law Committee.

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 is to submit its recommendations on offences both compoundable and non-compoundable which could be recategorised as civil offences under the Companies Act, 2013.
• The panel will propose measures to improve the functioning of the National Company Law Tribunal.
• The committee will also examine the feasibility of introducing settlement mechanism, deferred prosecution agreement within the fold of the Companies Act, 2013.

What are the changes being discussed?

• The Union government is planning to introduce an amendment to do away with jail term in over 40 of the 66 sections under the Companies Act 2013.
• Additionally, the government is also seeking to lower the penalty for small companies.
• These changes are expected to benefit around 8 lakh of the 1.1 million registered companies in the country with a turnover of up to Rs 2 crore and a paid-up capital of less than Rs 50 lakh.
• The new amendments will also allow companies and their executives to avoid persecution or jail term by paying up penalties. 
• Once the amendments are approved,civil offences will be dealt through Ministry of Corporate Affairs’ in-house mechanism led by the registrar of companies.

Additional information:

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.