The Union Cabinet on Wednesday approved amendments to the Companies Act, to decriminalise various offences.
Cabinet has approved 72 changes to 65 sections of the Companies Act, Finance and Corporate Affairs Minister Nirmala Sitharaman said.
Claiming that the proposed amendments were aimed at improving the ease of doing business, Ms. Sitharaman explained: “Out of 66 compoundable offences under the Act, 23 will get recategorised so that they can be dealt with through in-house adjudication framework, seven have been omitted altogether, 11 will have limited punishment in the form of fines alone by removing imprisonment provision, five will be dealt with under different alternative frameworks, six which had earlier been decriminalised will now have reduced quantum of penalties.”
The proposed amendments will ensure that companies which have an obligation to spend Rs. 50 lakh per annum or less on corporate social responsibity (CSR) are no longer required to have a CSR committee. Companies which spend over the obligated 2% on CSR in a particular year can carry it forward as credit for fulfilment of CSR obligations for the next few years as well.
In November, a government-appointed high level panel proposed decriminalising more than half of the existing compoundable offences under the companies law as well as lower monetary penalties for violations by startups, amid efforts to further improve the ease of doing business in the country.
This is the second amendment being made to the companies Act in the last one year. The Act was amended in July last year to tighten Corporate Social Responsibility (CSR) norms and ensure stricter action for non-compliance of the company law regulations.