On Saturday, the Lok Sabha passed a bill that seeks to decriminalise certain offences under the Companies Act, 2013, in case of defaults but not involving frauds.
The Companies (Amendment) Act, 2020, was passed by Lok Sabha through voice vote.
Replying to the debate on the bill, Finance & Corporate Affairs Minister Nirmala Sitharaman said that steps have been taken for decriminalisation for certain offences by companies & penal provisions have now been reduced to cover 124 sections from the earlier 134.
Sitharaman said the decriminalisation of offences under the Companies Bill 2020 will benefit small & medium scale industries.
She said that “For petty offences, taking action on MSME sector companies is uncalled for. Importantly, the serious non-compoundable offences will remain the same as in Companies Act 2013 which is 35. Non-compoundable offences constitute offences of fraud, injury to public interest & deceit. There are 17 sections which will facilitate ease of living for the owners of companies”.
The bill has made three changes as regards changes in offences.
The bill removes the penalties which apply for any change in the rights of a class of shareholders made in violation of the Act.
Where a specific penalty isn’t mentioned, the Act prescribes a penalty of up to Rs 10,000 which may extend to Rs 1,000 per day for a continuing default.
It also removes imprisonment in certain offences. It removes the imprisonment of three years applicable to a company for buying back its shares without complying with the Act.
The bill reduces the maximum fine for failure to file an annual return with the Registrar of Companies from Rs 5,00,000 to Rs 2,00,000.
The bill was introduced in Lok Sabha by Sitharaman.
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