You are here: Home » Economy & Policy » News
Business Standard

Cabinet clears ponzi Ordinance, fresh changes in the Companies Act

The ordinance on ponzi schemes will prohibit all deposit-taking activities that are not regulated by various regulators

Indivjal Dhasmana  |  New Delhi 

Carte blanche to notify law requires reform

The Union Cabinet on Tuesday cleared four ordinances, including those banning unregulated deposit or and allowing amendments to the Companies Act, after the Bills concerned could not be taken up the Rajya Sabha due to disturbance despite being cleared in the Lok Sabha.

The other two were the re-issuance of the contentious triple talaq ordinance that makes the practice of instant divorce by Muslim men a penal offence, and the Indian Medical Council (Amendment) Second Ordinance, 2019, to allow the Board of Governors (BoG) to run the scam-tainted apex body for regulating medical education.

After the Cabinet meeting in the evening, Finance Minister Arun Jaitley said it has requested President Ram Nath Kovind to promulgate these ordinances.

Chart

The ordinance on will prohibit all deposit-taking activities that are not regulated by various regulators.

It will identify three different types of offences — running of unregulated deposit schemes, fraudulent default in regulated deposit schemes, and wrongful inducement in relation to


ALSO READ: How a new Bill proposes to tighten the noose on ponzi schemes like Saradha

The related Bill prescribes monetary penalty which could be as high as Rs 50 crore and a jail term of up to 10 years for duping depositors.

The Bill aims at banning unregulated deposit collections altogether, by making such activities an offence ex-ante, replacing the existing legislative-cum-regulatory framework that only comes into effect ex-post, with considerable time lags.

The ordinance to amend the Companies Act will re-categorise 16 minor offences as purely civil defaults, said an official statement.

It will also transfer certain routine functions such as dealing with applications for change of financial year and conversion from public to private companies from the National Company Law Tribunal (NCLT) to the central government. The changes are expected to lead to greater compliance by the corporate, de-clogging of special courts and the NCLT, and effective enforcement of the Act.

ALSO READ: Here's how to spot a ponzi scheme instantly and avoid becoming a victim

Currently, around 60 per cent of the 40,000-odd cases pending in courts pertain to sections dealing with procedural lapses that are proposed to be shifted to in-house adjudication mechanism, thereby incentivising compliance by the corporate.

The ordinance on the will amend the Muslim Women (Protection of Rights on Marriage) Bill, 2018. It seeks to protect the rights of married Muslim women and prevent divorce by the practice of instantaneous and irrevocable ‘talaq-e-biddat’ by their husbands, the statement said.

The ordinance on medical council will enable the Board of Governors (BOG), appointed in supersession of the Medical Council of India (MCI), according to the provisions of the earlier ordinance, to continue exercising the powers of the MCI.

First Published: Wed, February 20 2019. 01:15 IST
RECOMMENDED FOR YOU