Govt sets up panel to review penal provisions of Companies Act
16 July 2018
The ministry of corporate affairs (MCA) has constituted a 10-member committee headed by MCA secretary to review penal provisions in the Companies Act, 2013, with a view to ‘de-criminalisation’ certain offences.
The MCA seeks to review offences under the Companies Act, 2013 as some of the offences may be required to be decriminalised and handled through an in-house mechanism, where a penalty could be levied in instances of default. This would also allow the trial courts to pay more attention on offences of serious nature, an official release said.
The committee has been asked to submit its recommendations to the centre for consideration within 30 days, the release added.
It has been decided that the existing compoundable offences in the Companies Act, 2013, viz, offences punishable with fine only or punishable with fine or imprisonment or both may be examined and a decision taken as to whether any such offences may be considered as ‘civil wrongs’ or ‘defaults’ where a penalty by an adjudicating officer may be imposed in the first place. Only on further non-compliance of the order of such authority will it be categorised as an offence adjudicated in a special court.
It is also required to be seen as to whether any non-compoundable offences, viz, offence punishable with imprisonment only, or punishable with imprisonment and also with fine under the Companies Act, 2013 may be made compoundable.
The terms of reference of the committee include:
- Examine the nature of all ‘acts’ categorised as compoundable offences, viz, offences punishable with fine only or punishable with fine or imprisonment or both under the CA-13 and recommend if any of such ‘acts’ may be re-categorised as ‘acts’ which attract civil liabilities wherein the company and its ‘officers in default’ are liable for penalty;
- Review the provisions relating to non-compoundable offences and recommend whether any such provisions need to be re-categorised as compoundable offence;
- Examine the existing mechanism of levy of penalty under the CA-13 and suggest any improvements thereon
- Lay down the broad contours of an in-house adjudicatory mechanism where penalty may be levied in a MCA-21 system driven manner so that discretion is minimised;
- Take necessary steps in formulation of draft changes in the law; and any other matter which may be relevant in this regard.
The committee headed by secretary, ministry of corporate affairs has former secretary-general Lok Sabha and chairman of BLRC TK Vishwanathan, Kotak Mahindra bank MD Uday Kotak, executive chairman of Shardul Amarchand Mangaldas & Co Shardul S Shroff, founder and managing partner of AZB and Partners Ajay Bahl, senior partner and GSA associate member Amarjit Chopra, Vidhi Centre for Legal Policy’s Arghya Sengupta, former president of FICCI, Sidharth Birla, partner and executive director of Smart Group Preeti Malhotra and joint secretary (policy) in the ministry of corporate affairs as members.