THE GOVERNMENT OF INDIA TO REVIEW OFFENCES UNDER COMPANIES ACT, 2013

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The Ministry of Corporate Affairs (MCA) in India has issued an order dated 13th July, 2018 thereby notifying the formation of a Committee to review certain offences under the Companies Act, 2013 (the Act) and decriminalize them in order to facilitate the courts to focus on offences of serious nature.

The ten member Committee would be chaired by the Secretary of MCA, Shri Injeti Srinivas. The Committee comprises of a number of prominent members including Shri T.K. Vishwanathan, the Ex-Secretary General of the Lok Sabha; Shri Shardul Shroff , the Executive Chairman of Shardul Amarchand Mangaldas & Co.; Shri Ajay Bahl, the Founder Managing Director of AZB & Partners; Shri Uday Kotak, Managing Director of Kotak Mahindra Bank; Shri Sidharth Birla, the Past President of Federation of Indian Chambers of Commerce & Industry (FICCI) and others.

The Committee may also invite experts from the Securities and Exchange Board of India, the Reserve Bank of India and the Comptroller and Auditor General of India for broad based consultation. The Committee has been constituted for the following purpose:

To examine the nature of acts categorized as compoundable offences, that are punishable with a fine or imprisonment or both, and recommend whether such acts can be re-categorized as civil wrongs or defaults. Further, whether non- compoundable offences, that are punishable with imprisonment or with imprisonment and fine, can be made compoundable.

To examine the current mechanism of levy of penalty/fine under the Act and to make recommendations for possible improvements.

To lay down an in-house adjudicatory mechanism to resolve such disputes without having to approach the courts.

To take necessary steps for the formulation of draft changes in the law and any other steps as may be relevant.

The Committee would have to submit any recommendations so made within thirty days of its first meeting.

A number of experts have welcomed this move of the Government as it may help to reduce the burden on the courts and enable them to pay attention to more serious offences. Thus the in-house adjudicatory system would hear and determine cases involving simple violations where only fine/penalty may be imposed.

Harini Daliparthy,

Senior Legal Associate

with

Sukriti Goyal

School of Law, University of Petroleum and Energy Studies

Intern,

The Indian Lawyer

 

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