The Lok Sabha on Saturday passed the Companies (Amendment) Bill, 2020 to decriminalize minor procedural or technical lapses under the Companies Act, 2013, into civil wrong.
Aim to enhance the ease of doing business in India.It proposes to amend 64 provisions of the Act to make overall 75 changes.
The Bill was introduced in the Lower House by Minister of Corporate Affairs, Nirmala Sitharaman during the Budget Session this year.
However, that session was wound up early amid the pandemic and the Bill was finally taken up yesterday.
As per the statement of Objectives annexed it, the Bill inter alia seeks to:
•decriminalise offences in case of defaults which can be determined objectively and which otherwise lack any element of fraud or do not involve larger public interest;
•empower the Central Government to de-list certain class of companies, in consultation with SEBI, primarily for listing of debt securities;
•Incorporate a new Chapter XXIA in the 2013 Act to govern Producer Companies (earlier governed by the 1956 Act);
Set up new NCLAT Benches.
Parliamentary Debate
The Bill was largely supported by the House to enhance the ease of doing business in India.
However, apprehensions were expressed that such decriminalization of offences may encourage “unbridled corporate culture” of covering up default by merely expending funds.
The members thus consistently urged the Government to ensure that provisions of the Act are strictly implemented.
AITC MP Prof. Sougata Roy said that the Act of 2013 was drafted harshly, certainly because it was passed in the backdrop of the Satyam scandal.
He thus concurred that there was a need to decriminalize minor offences, that did not constitute fraud, and help to reduce the burden of NCLT.
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It was also pointed out that the Bill lowers monetary penalties for violation by start-ups, and this will encourage new businesses in India.
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