Overdue correction

Overdue correction

Article

1. Centre has announced a committee to relook several provisions of the companies act, 2013

Important analysis

2. Companies act, 2013 came under severe criticism as it impose stiff penalties and, in some cases, prison terms as well, for directors and key management personnel

3. In 2013 act, some of the provisions in the law are so tough that even a spelling mistake or typographical error could be construed as a fraud and lead to harsh punishment

4. Industry bodies had red-flagged the impact of such provisions on the ease of doing business, and investor sentiment in general.

5. Also trial court get overloaded with cases filed by officials even with minor violations.

6. To solve this problem a 10-member committee, which includes top banker Uday Kotak, appointed by the Corporate Affairs Ministry

7. It has been tasked with checking if some of the violations that can attract imprisonment (such as a clerical failure by directors to make adequate disclosures about their interests) may instead be punished with monetary fines.

8. The committee has also been asked to suggest the broad contours for an adjudicatory mechanism that allows penalties to be levied for minor violations with minimal discretion available to officials.

9. The government hopes such changes in the regulatory regime would allow trial courts to devote greater attention to serious offences