The Union cabinet today cleared 72 amendments to the Companies Act, 2013, decriminalizing various offences and moderating the penalty regime to boost of ease doing business.
The move to ease the rigors of compliance comes at a timewhen the Indian economy is going through a crippling slowdown due to a slump inconsumption.
A Bill to amend the Act is likely to be moved in Parliamentduring the current session to give effect to the changes.
Union finance minister Nirmala Sitharaman told reportersthat the proposed changes will make the Companies Act, 2013 “morehumane”.
Sitharaman said a ministerial panel had looked into how manysections in the Companies Act caused businesses worries. “We suggested 72changes to 65 sections in the Companies Act, 2013. In this set of amendments,the priority is to de-criminalise the Act. Majority of the changes are toremove criminality of the offences where no mala fide is intended. The majorthrust is to improve the ease of doing business and to de-criminalise the law,”the minister said.
Sitharaman explained that the changes proposed includerecategorising 23 offences of 66 compoundable offences in the Act. These willnow be dealt under an in-house framework meant to adjudicate on the matter.
“We are limiting punishments for 11 other compoundableoffences to only fines by removing imprisonment. Five other offences will bedealt with under different alternative framework. Also, we are reducing thequantum of penalties offences which were de-criminalised earlier,” theminister said.
Besides these, from the point of ease of doing business, alot of other steps are being taken, Sitharaman said. One such important step isexempting companies, which have an obligation to spend Rs.50 lakh or less fromthe requirement of having a corporate social responsibility committee.
“Also, if a company spent more than 2% of net profit in oneyear, the general approach was to count only 2% under this obligation. Now weare allowing the excess amount spent to be carried over to be adjusted againstthe obligation of subsequent year,” the minister said.