The Companies Amendment Bill was passed in the Rajya Sabha on Tuesday after it was approved in the Lok Sabha on Saturday. The bill seeks to decriminalize various non-compoundable offenses in lieu of promoting the ease of doing business. It will also introduce a chapter related to producer organizations in the legislation. The bill was passed in the Lok Sabha on Saturday.
Finance and Corporate Affairs Minister Nirmala Sitharaman has said that the bill will also help reduce the litigation burden on small companies. While 48 sections of the bill will be amended, the finance minister has stressed that serious offenses, including fraud and those that cause “injury to public interest or deceit” under the act, will remain unchanged.
The following amendments will be introduced in the new Act:
- A penalty up to Rs 10,000 which may extend to Rs 1,000 per day for a continuing default for violations which don’t prescribe a specific penalty.
- The bill removes the imprisonment of three years applicable to a company for buying back its shares without complying with the Act.
- It reduces the maximum fine for failure to file an annual return with the Registrar of Companies from Rs 5,00,000 to Rs 2,00,000.
- The amendment will allow the central government to either include or exclude specified classes of securities from the definition of a “listed company”.
- Companies with a Corporate Social Responsibility (CSR) liability of up to Rs 50 lakh a year will be exempted from setting up CSR committees.