The Committee, constituted by Government of India in July 2018 to review the existing framework dealing with offences under the Companies Act, 2013 and related matters and make recommendations to promote better corporate compliance, has submitted its final report here on Monday.
The report was presented to Union Minister for Finance and Corporate Affairs Minister Arun Jaitley by Secretary of Ministry of Corporate Affairs Injeti Srinivas, who chaired the committee.
The Committee undertook a detailed analysis of all penal provisions, which were then broken down into eight categories based on the nature of offences.
It recommended that the existing rigour of the law should continue for serious offences, covering six categories, whereas for lapses that are essentially technical or procedural in nature, mainly falling under two categories may be shifted to in-house adjudication process.
The Committee observed that this would serve the twin purposes promoting of ease of doing business and better corporate compliance. It would also reduce the number of prosecutions filed in the Special Courts, which would, in turn, facilitate speedier disposal of serious offences and bring serious offenders to book. The cross-cutting liability under section 447, which deals with corporate fraud, would continue to apply wherever fraud is found.
In addition, the report also touches upon certain essential elements related to corporate governance such as the declaration of commencement of business, maintenance of a registered office, protection of depositors' interests, registration and management of charges, declaration of significant beneficial ownership, and independence of independent directors.
The main recommendations of the Committee are Restructuring of Corporate Offences to relieve Special Courts from adjudicating routine offences, De-clogging the NCLT and recommendations related to corporate compliance and corporate governance.
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