Companies LawLegal Updates

Rajya Sabha passes Companies (Amendment) Bill, 2020, decriminalises various non- compoundable offences

Companies Law Update

The amendments is essentially in two different compartments :- 

(a) There are 48 amendments that aim at decriminalisation of various non- compoundable offences and would enhance ease of doing business. 

(b)  There are 18 amendments related to compliances. 

There is no relaxation in the provision which is in reference to the serious offences which includes fraud and those that cause injury to public interest.

The amendment removes that penalty in reference to imprisonment for 9 offences which are related to  non- compliance with NCLT orders and also reduces the amount of fine payable in cases like 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.

Furthermore, one – person companies or small companies would be only liable to pay upto 50% of the penalty in certain cases. A maximum limit of penalty for startups and a one-person company has been kept at Rs 200,000. Certain civil offences which are compoundable in nature can now be tried before an in-house adjudicating mechanism without approaching the courts. 

The Act states that the companies are required to file certain resolutions with the Registrar of Companies, which include resolutions of the Board of Directors of the company to borrow money, or grant loans. However, amendment exempts banking companies from filing resolutions passed to grant loans or to provide guarantees or security for a loan. This exemption has been extended to registered non banking financial companies and housing finance companies.

Under the amendment, companies with a CSR liability of up to Rs 50 lakh a year are exempted from setting up CSR Committees.

The Bill empowers the central government to allow certain classes of  public companies to list classes of securities in foreign jurisdictions. Furthermore, the Bill also empowers the central government  in consultation with the SEBI, to exclude companies issuing specified classes of securities from the definition of a “listed company”.

The amendment makes special provisions for payment of remuneration to executive directors which also includes managing director and other whole-time director of the company if the company has inadequate or no profits in a year.  

The Bill introduces a separate chapter for “producer companies”. Producer companies are the companies which are engaged in production, marketing and sale of agricultural produce, and sale of produce from cottage industries. 

The Bill also paves the way for the setting up of Benches of the National Company Law Appellate Tribunal.

 

Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *