Govt moves to decriminalise non-serious offenses under Companies Act

The Srinivas committee constituted last July recommended re-categorising 16 offences under the Companies Act - out of 81 in the category of compoundable offences - as defaults carrying civil liabilities. These changes have been introduced through the Companies (Amendment) Act, 2019.

By BusinessToday.In  
Monday, August 19, 2019

Days after the government agreed to decriminalise non-compliance with corporate social responsibility spending norms, the Ministry of Corporate Affairs (MCA) is planning to look at several other penal provisions in the Companies Act, 2013, and treat them as civil offences. Last July, the ministry had constituted a 10-member committee headed by Corporate Affairs Secretary Injeti Srinivas to review whether some offences could be decriminalised and handled through an in-house mechanism, which involves levying penalties in cases of default. The idea was to allow the clogged up trial courts to pay more attention to offences of a serious nature.

The panel's report, submitted last August, recommended re-categorising 16 offences - out of 81 in the category of compoundable offences, i.e. those punishable by fine and/or imprisonment - as defaults carrying civil liabilities under the above mechanism. These changes have been introduced through the Companies (Amendment) Act, 2019, which received President Ram Nath Kovind's nod on July 31.

Here are some of the biggest changes:

The government is now planning to expand the list to cover all but the most serious offences. The MCA is reportedly mulling decriminalising as many as 65 sections under the category of compoundable offences. According to sources, this was indicated in a recent meeting between industry-corporate giants and senior government officials.

Also read: Insolvency law amendments to ensure greater timeliness: Nirmala Sitharaman

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