The government has constituted a 11-member company law committee to analyse and examine the decriminalisation of certain offences under the Companies Act, 2013, improving corporate compliance and other steps to improve the ease of doing business for law-abiding citizens.
“The committee will study various areas in the Act which require amendments, but decriminalisation will be taken up on priority,” a senior government official said.
The committee will submit its recommendations on offences — both compoundable and non-compoundable — which could be recategorised as ‘civil wrongs’ and suggest measures to optimise the compliance requirements under the Companies Act, 2013, a press statement said.
The offences punishable with imprisonment, a fine or both are compoundable, and offences punishable with imprisonment and a fine are non-compoundable.
It will also examine the feasibility of introducing settlement mechanism, deferred prosecution agreement within the fold of the Companies Act, 2013.
The committee will also study the existing framework under the Limited Liability Partnership Act, 2008, and suggest measures to plug the gaps, if any, to enhance the ease of doing business.
The panel will propose measures to further declog and improve the functioning of the National Company Law Tribunal. It will also look at ways of removing any bottlenecks in the overall functioning of the statutory bodies such as the Serious Fraud Investigation Office, national financial reporting authority.
Corporate affairs ministry also wants to bring down the number of returns companies file with the MCA21 portal. “There are 70 types of return. We will see if these can be reduced in number and frequency with which they are filed and also if we can shift to the penalty system,” another senior official said.
The panel will submit its recommendations in phases and subject-wise to the government from time to time. It will initially have a tenure of one year from the date of its first meeting.
Chaired by Corporate Affairs Secretary Injeti Srinivas, the committee has among its members Uday Kotak, managing director, Kotak Mahindra Bank; Shardul S Shroff, executive chairman, Shardul Amarchand Mangaldas; Ajay Bahl, founder, AZB & Partners; Sidharth Birla, chairman, Xpro India; Rajib Sekhar Sahoo, principal partner, SRB & Associates; and Amarjit Chopra, senior partner, GSA Associates, among others.
In the recently amended Companies Act, the government has decriminalised 16 Sections. Most of these cover lapses such as prohibition on issues of shares at a discount or failure to file a copy of a financial statement with the registrar. Both the offences had a provision for a six-month prison term and a fine.
The government has now restricted the punishment to a fine or penalty and done away with imprisonment.