Well, the Lok Sabha on Saturday passed a bill to further amend around 48 sections of the Companies Act, 2013 by decriminalizing various non-compoundable offences in case of defaults, but not involving frauds, omitting imprisonment for various offences which were considered procedural and technical in nature.
The bill comes at a time when companies are reeling under stress due the coronavirus pandemic. The Companies (Amendment) Bill, 2020 was passed by the Lower House through voice vote. The (4th amendment) Bill was introduced in the lower house in May, 2020 by Finance and Corporate Affairs Minister Nirmala Sitharaman.
To recall, the Companies Act 2013 is an Act of the Parliament of India which regulates incorporation of a company, responsibilities of a company, directors, dissolution of a company.
Speaking on the bill, Sitharaman yesterday said decriminalisation of various penal provisions under the companies law will also help small companies by reducing the litigation burden on them. Sitharaman said there are currently around 124 penal provisions compared to 134 in 2013 under the Companies Act. The proposed amendment will be carried out in Section 23 of the Companies Act.
The bill removes the penalty, imprisonment for 9 offenses which relate to non-compliance with orders of the national company law tribunal (NCLT), and reduces the amount of fine payable in certain cases. These include matters relating to winding-up of companies, default in publication of NCLT order relating to reduction of share capital, rectification of registers of security holders, variation of rights of shareholders and payment of interest and redemption of debentures.
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