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Government constitutes 10-member committee to review offences under Companies Act, 2013

Jul 16, 2018 15:26 IST
Government constitutes 10-member committee to review offences under Companies Act, 2013

The Ministry of Corporate Affairs (MCA) has constituted a 10 Member Committee to review the penal provisions in the Companies Act, 2013.

The committee headed by the Secretary of Ministry of Corporate Affairs will examine ‘de-criminalisation’ of certain offences.

Objective

The Commerce Ministry seeks to review offences under the Companies Act, 2013, as some of the offences may be required to be decriminalised and handled in an in-house mechanism, where a penalty could be levied in instances of default.

Key Highlights

The decision will allow the trial courts to pay more attention on offences of serious nature.

It has been decided that the existing compoundable offences under the Companies Act-2013 namely, offences punishable with fine only or punishable with fine or imprisonment or both may be examined.

A decision will also have to be taken as to whether any of such offences may be considered as ‘civil wrongs’ or ‘defaults’, which will call for a penalty by an adjudicating officer.

In that case, only after non-compliance of the order of such an authority will the offences be categorised as an offence triable by a special court.

Besides, the committee will also be required to examine whether any non-compoundable offences such as offence punishable with imprisonment only or punishable with imprisonment and also with fine under the Companies Act, 2013 may be made compoundable.

The committee will be required to submit its report within thirty days to the Union Government for consideration of its recommendations.

Following are the terms of reference of the Committee:

To examine the nature of all ‘acts’ categorised as compoundable offences and recommend if any of such ‘acts’ may be re-categorised as ‘acts’, which attract civil liabilities where the company and its ‘officers in default’ are liable for a penalty.

To review the provisions relating to non-compoundable offences and recommend whether any such provisions need to be re-categorised as a compoundable offence.

To examine the existing mechanism of levy of penalty under the Companies Act and suggest any improvements.

To lay down the broad outline of an in-house adjudicatory mechanism where penalty may be levied in a MCA21 system driven manner so that discretion is minimised.

To take necessary steps in the formulation of draft changes in the law or any other matter that may be relevant in this regard.

Composition of the Committee

S.no.

Member Name

Role

1.

Secretary,  Ministry of Corporate Affairs

Chairperson

2.

TK Vishwanathan, Former Secretary General Lok Sabha and Chairman, BLRC

Member

3.

Uday Kotak, MD, Kotak Mahindra Bank

Member

4.

Shardul S Shroff, Executive Chairman, Shardul Amarchand Mangaldas & Co. 

Member

5.

Ajay Bahl, Founder Managing Partner, AZB & Partners

Member

6.

Amarjit Chopra, Senior Partner, GSA Associate

Member

7.

Arghya Sengupta, Vidhi Centre for Legal Policy

Member

8.

Sidharth Birla, Former President, FICCI

Member

9.

Preeti Malhotra, Partner and Executive Director of Smart Group

Member

10.

Joint Secretary (Policy), Ministry of Corporate Affairs

Member-Secretary

 

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