In order to further promote ease of doing Business, the Union Cabinet headed by Narendra Modi has approved the Companies (Second Amendment) Bill, 2019 to amend the Companies Act, 2013 with a total of 72 changes in its 65 sections. The focuses of these changes are decriminalization of various provisions Act i.e. to lessen of criminal penalties in relation to certain sections, and to permit direct overseas listing of Indian corporates.66 compoundable offences to be changed under the Companies Act:
Compoundable offences are those which are less serious and can be compromised with the victim with or without the permission of court. Following are the changed proposed under them:
- Out of 66 compoundable offences under the Act, 23 will be recategorised, 7 have been omitted altogether, 11 will have limited punishment in the form of fines alone by removing imprisonment provision, 5 will be dealt with different alternative frameworks, 6 which had earlier been decriminalized will now have reduced quantum of penalties.
- Also, monetary penalties lowered for violations by startups.
Key Proposed changes:
-There are 52 proposals that would result in 48 amendments for greater ease of doing business for law abiding corporates by way of removing criminality totally in respect of 35 procedural and technical defaults.
-Amendment would be carried in Section 23 of the Act to allow direct listing of securities by Indian public companies in permissible foreign jurisdictions.
–The amendments proposed relaxation in corporate social responsibility (CSR) compliance requirements as companies which have an obligation to spend Rs. 50 lakh per annum or less on CSR are no longer required to have a CSR committee.
-Also, Companies which spend over the obligated 2% on CSR in a particular year can carry it forward as credit for fulfilment of CSR obligations for the next few years.
-It also proposed creation of separate Benches at the National Company Law Appellate Tribunal (NCLAT).
About Finance Ministry:
Union Minister– Nirmala Sitharaman
Minister of State (MoS)– Anurag Singh Thakur
Finance Secretary– Ajay Bhushan Pandey