On November 18, 2019 the 11-member Company Law Committee submitted its report to Union Minister of Finance and Corporate Affairs (MoF&CA), Smt. Nirmala Sitharaman to remove criminality in the Companies Act 2013. The report was submitted by the committee’s chair, Shri Injeti Srinivas, Secretary of Ministry of Corporate Affairs (MoCA). Changes have been recommended in the report to the 46 penal provisions in order to remove criminality or to restrict punishment to only fine, or to allow rectification of defaults through alternative methods.
Principle adopted: The committee adopted principle based approach to further remove criminality in case of defaults, after it took note of the progress made consequent to the Companies (Amendment) Act, 2019. The progress resulted in de-criminalisation of 16 minor procedural/technical lapses (slip or failure) under the Companies Act, 2013 into ‘civil wrongs’.
Committee recommendations: The recommendations of the committee was submitted to the finance ministry in form of 2 chapters. Some of the key recommendations include,
- Retention of status-quo in case of the non-compoundable offences.
- Power to exclude certain class of companies from the definition of ‘listed company’, mainly for listing of debt securities, in consultation with Security Exchange Board of India (SEBI).
- Reviewing provisions on disqualification of directors after due consultation and examination.
- Proposing benches of the National Company Law Appellate Tribunal(NCLAT). Click here to know more.
Key Points:
i.The law committee was constituted by the Ministry of Corporate Affairs in September, 2019, to further decriminalise the provisions of the Companies Act, 2013 based on their gravity. It was also constituted to further provide ease of living for corporates in India.
ii.Members of the committee: Some of the members of the committee include Shri T. K. Viswanathan, Ex- Secretary General of the Lok Sabha; Uday Kotak, Managing Director(MD) of Kotak Mahindra Bank; Shardul Shroff, Executive Chairman(EC) of Shardul Amarchand Mangaldas & Co; Ms. Preeti Malhotra, Group President, Corporate Affairs & Governance, Smart Group; Shri KVR Murty, Joint Secretary, Ministry of Corporate Affairs (Member Secretary of the Committee) and others.
About Ministry of Corporate Affairs:
Headquarters- New Delhi.
Minister of State(MoS)- Anuragh Singh Thakur.
