Companies Amendment Bill, 2020 introduced in Lok Sabha on 17-03-2020.
In view of constant endeavour of the Government to facilitate greater ease of living to law abiding corporates, a Company Law Committee (CLC) consisting of representatives from Ministry, industry chambers, professional institutes and legal fraternity was constituted on the 18th September, 2019, to decriminalise some more provisions of the Act, based on their gravity and to take other concomitant measures to provide further ease of living for corporates in the country. After careful analysis, the CLC submitted its report in November, 2019.
Based on the recommendations of the CLC and internal review by the Government, it is proposed to amend various provisions of the Act to decriminalise minor procedural or technical lapses under the provisions of the said Act, into civil wrong; and considering the overall pendency of the courts, a principle based approach was adopted to further remove criminality in case of defaults, which can be determined objectively and which otherwise lack any element of fraud or do not involve larger public interest. In addition, the Government also proposes to provide greater ease of living to corporates through certain other amendments to the Act.
The Companies (Amendment) Bill, 2020, inter alia, provides for the following, namely:—
(a) to decriminalise certain offences under the Act in case of defaults which can be determined objectively and which otherwise lack any element of fraud or do not involve larger public interest;
(b) to empower the Central Government to exclude, in consultation with the Securities and Exchange Board, certain class of companies from the definition of “listed company”, mainly for listing of debt securities;
(c) to clarify the jurisdiction of trial court on the basis of place of commission of offence under section 452 of the Act for wrongful withholding of property of a company by its officers or employees, as the case may be;
(d) to incorporate a new Chapter XXIA in the Act relating to Producer Companies, which was earlier part of the Companies Act, 1956;
(e) to set up Benches of the National Company Law Appellate Tribunal;
(f) to make provisions for allowing payment of adequate remuneration to non executive directors in case of inadequacy of profits, by aligning the same with the provisions for remuneration to executive directors in such cases;
(g) to relax provisions relating to charging of higher additional fees for default on two or more occasions in submitting, filing, registering or recording any document, fact or information as provided in section 403;
(h) to extend applicability of section 446B, relating to lesser penalties for small companies and one person companies, to all provisions of the Act which attract monetary penalties and also extend the same benefit to Producer Companies and start-ups;
(i) to exempt any class of persons from complying with the requirements of section 89 relating to declaration of beneficial interest in shares and exempt any class of foreign companies or companies incorporated outside India from the provisions of Chapter XXII relating to companies incorporated outside India;
(j) to reduce timelines for applying for rights issues so as to speed up such issues under section 62;
(k) to extend exemptions to certain classes of non-banking financial companies and housing finance companies from filing certain resolutions under section 117;
(l) to provide that the companies which have Corporate Social Responsibility spending obligation up to fifty lakh rupees shall not be required to constitute the Corporate Social Responsibility Committee and to allow eligible companies under section 135 to set off any amount spent in excess of their Corporate Social Responsibility spending obligation in a particular financial year towards such obligation in subsequent financial years;
(m) to provide for a window within which penalties shall not be levied for delay in filing annual returns and financial statements in certain cases;
(n) to provide for specified classes of unlisted companies to prepare and file their periodical financial results;
(o) to allow direct listing of securities by Indian companies in permissible foreign jurisdictions as per rules to be prescribed.
*Copy of the Bill — Companies Amendment Bill, 2020