Changes to Companies Act: Here are the amendments passed by Lok Sabha
The Lok Sabha on Saturday 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. Around 48 sections of the Companies Act, 2013 will be amended to decriminalise various offences. Speaking on the bill, Finance and Corporate Affairs Minister Nirmala Sitharaman said decriminalisation of various provisions under the companies law will also help small companies by reducing the litigation burden on them.
Sitharaman said there are currently around 124 penal provisions compared to 134 under the Companies Act, 2013. Stressing that there will be no relaxation for serious offences, including fraud and those that cause “injury to public interest or deceit”, the minister said the number of “non-compoundable” offences under the Act remains the same at 35.
The bill was introduced in Lok Sabha by Sitharaman.
Here are some of the changes introduced in the Companies Act:
Changes to offenses: The bill removes the penalty, imprisonment for certain offenses, and reduces the amount of fine payable in certain cases. However, Under the Act, one-person companies or small companies are only liable to pay up to 50% of the penalty for certain offences.
Exclusion from listed companies: The Bill empowers the Centre in consultation with the Sebi, to exclude companies issuing specified classes of securities from the definition of a “listed company”.
Exemptions from ling resolutions: The Act requires companies 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, banking companies are exempt from filing resolutions passed to grant loans or to provide guarantees or security for a loan. This exemption has been extended to registered nonbanking financial companies and housing nance companies.
CSR: The Bill exempts companies with a CSR liability of up to Rs 50 lakh a year from setting up CSR Committees.
Benches of NCLAT: The Bill seeks to establish benches of the National Company Law Appellate Tribunal in New Delhi.
Direct listing in foreign jurisdictions: The Bill empowers the central government to allow certain classes of public companies to list classes of securities in foreign jurisdictions.
