Parliament passes Companies Amendment Bill 2020; all that you need to know

In a bid to promote ease of doing business in India, the Parliament today passed Companies Amendment Bill 2020, which will decriminalise various offences under 48 sections of the companies act 2013. A new chapter on producer organisations will also be introduced in the legislation to help especially those in the agriculture sector.

The bill also gives authority to central government to allow specific public companies to list certain classes of securities in foreign stock exchanges to raise capital. Also, in case of corporate social responsibility or CSR, the bill proposes that the companies having CSR spending obligation of up to Rs 50 lakh need not constitute a CSR committee.

Finance Minister Nirmala Sitharaman in Rajya Sabha today said since 2013, the number of penal provisions have come down to 124 from 134. However, she also reiterated that there won't be any alteration in the 'non-compoundable' serious offences that cause “injury to public interest or deceit'.

These offences will remain at 35 since latest companies act was enacted in 2013. Compoundable offences are those which can be settled via payment of some money. The bill also seeks to remove imprisonment, decrease penalty for certain offences and timelines for rights issue. Imprisonment has been removed in 23 compoundable offences for example in case of non-compliance in relation to related party transactions imprisonment has been removed and in lieu of that monetary penalty to be charged has been hiked. 

However, in relation to 22 offences, the monetary penalty has been reduced. The nature of these penalties is also being changed to civil offence from criminal offence. The interest of small companies and startups has also been kept in consideration while deciding on the quantum of penalty.

See Zee Business Live TV Streaming Below:

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.