The Lok Sabha has passed the Companies (Amendment) Bill that seeks to decriminalise specific offences under the Companies Act, 2013, in case of defaults but not involving frauds.
Let’s Understand in Detail –
The Companies (Amendment) Bill, 2020
The Companies (Amendment) Bill, 2020, was passed by Lok Sabha where Around 48 sections of the Companies Act, 2013 will amende to decriminalise several offences.
The Finance Minister Nirmala Sitharaman stated on decriminalisation of various terms under the companies law. Also, will also assist small companies by reducing the litigation burden on them.
Know About Companies Act 2013
The Companies Act 2013 is the law including company incorporation, dissolution and the running of companies in India. The Act came into force across India on 12th September 2013 and has a few amendments to the former act of 1956. It has also organised new concepts like a One Person Company. Later the (4th amendment) Bill was introduced in the lower house in May 2020 by Finance and Corporate Affairs Minister Nirmala Sitharaman.
Now, the companies (amendment) bill comes at a time when companies are reeling under stress due to the coronavirus pandemic. The Companies (Amendment) Bill, 2020 was announced by the Lower House.
Speaking on the Companies (Amendment) Bill, Sitharaman stated that, it has currently around 124 penal provisions compared to 134 in 2013 under the Companies Act. The purposed amendment will carried out in Section 23 of the Companies Act.
New Changes Introduced in the Companies Act 2013
Some of the reforms introduced in the Companies Act are:
Changes to offences: The bill eliminates the penalty, imprisonment for certain offences, and reduces the amount of fine payable in several cases.
However, Under the Act, one-person companies or small companies are only likely to pay up to 50% of the penalty for certain offences.
Exclusion from listed companies: The Companies (Amendment) Bill allows the Centre in consultation with the SEBI, to dismiss companies issuing specified classes of securities from the definition of a “listed company”.
Exemptions from filing resolutions: The Act needs companies to file certain resolutions with the Registrar of Companies, which involve resolutions of the Board of Directors of the company to borrow money, or grant loans. However, banking companies has excluded from filing resolutions passed to grant loans. This exemption has increased to registered nonbanking financial companies and housing companies.
CSR: The Bill exempts businesses with a CSR liability of up to Rs 50 lakh a year from setting up CSR Committees.
Benches of NCLAT: The Bill seeks to build benches of the National Company Law Appellate Tribunal in New Delhi.
Direct listing in foreign jurisdictions: The Bill allows the central government to allow certain classes of public companies. And to list classes of securities in foreign jurisdictions.
If you require any other guidance concerning Company Incorporation, please feel free to contact our business advisors at 8881-069-069.
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