New Delhi:
Lok Sabha on Saturday passed a bill to further amend the Companies Act and decriminalise various compoundable offences as well as promote ease of doing business in the country. The Companies (Amendment) Bill, 2020 seeks to decriminalise various penal provisions, permit the direct overseas listing of Indian corporates and introduce a new chapter related to producer organisations in the legislation.
Reduction in penalties for certain offences as well as in timeline for rights issues, relaxation in CSR compliance requirements and creation of separate benches at the National Company Law Appellate Tribunal (NCLAT) are also among the proposed changes. Speaking on the bill, Finance and Corporate Affairs Minister Nirmala Sitharaman said decriminalisation of various provisions under the companies law will also help small companies by reducing litigation burden on them.
Around 48 sections of the Companies Act, 2013 will be amended to decriminalise various offences. Sitharaman said there are currently around 124 penal provisions compared to 134 in 2013 under the Companies Act.
Stressing that there will be no relaxation for serious offences, including fraud and those that cause “injury to public interest or deceit”, the minister said the number of “non-compoundable” offences under the Act remains the same at 35. Generally, compoundable offences are those which can be settled by paying a certain amount of money.
A new chapter on producer organisation will be added, the minister said and noted that it will be particularly helpful for farmer producer organisations. For promoting “ease of doing business,” the minister said that 17 provisions will be amended.
The amendment would be carried in Section 23 of the Act for including an enabling provision to allow direct listing of securities by Indian public companies in permissible foreign jurisdictions. This would provide an alternative source of capital for domestic companies and also broaden their investor base. Among others, companies with CSR obligation to spend Rs 50 lakh or less will not be required to constitute a committee in this regard.
Under the Act, a certain class of profitable companies are required to shell out at least 2 per cent of their three-year annual average net profit towards CSR (Corporate Social Responsibility) activities.
