LS passes bill to decriminalise some offences under Companies Act

The Lok Sabha on Saturday passed a bill that seeks to decriminalise certain offences under the Companies Act, 2013, in case of defaults but not involving frauds.

The Lok Sabha on Saturday passed a bill that seeks to decriminalise certain offences under the Compes Act, 2013, in case of defaults but not involving frauds.

The Compes (Amendment) Act, 2020, was passed by Lok Sabha through voice vote.

Replying to the debate on the bill, Finance and Corporate Affairs Minister Nirmala Sitharaman said that steps have been taken for decriminalisation for certain offences by compes and penal provisions have now been reduced to cover 124 sections from the earlier 134.

She said the decriminalisation of offences under the Compes Bill 2020 will benefit small and medium scale industries.

"For petty offences, taking action on MSME sector compes is uncalled for. Importantly, the serious non-compoundable offences will remain the same as in Compes Act 2013 which is 35. Non-compoundable offences constitute offences of fraud, injury to public interest and deceit. There are 17 sections which will facilitate ease of living for the owners of compes," she said.

The bill has made three changes as regards changes in offences.

The bill removes the penalties which apply for any change in the rights of a class of shareholders made in violation of the Act. Where a specific penalty is not mentioned, the Act prescribes a penalty of up to Rs 10,000 which may extend to Rs 1,000 per day for a continuing default.

It also removes imprisonment in certain offences. It removes the imprisonment of three years applicable to a company for buying back its shares without complying with the Act.

The bill reduces the maximum fine for failure to file an annual return with the Registrar of Compes from Rs 5,00,000 to Rs 2,00,000.

The bill was introduced in Lok Sabha by Sitharaman.

( With inputs from ANI )