Decriminalizing Companies Act provisions for fostering Ease of Doing Business
Amidst present pandemic crisis, the companies are under lots of stress on continuity of business. The Companies (Amendment) Act, 2020 acts as a saviour by decriminalising various provisions of the Companies Act, 2013. The Companies (Amendment) Act, 2020 decriminalizes 48 sections by either removing or reducing penal provisions and omitting imprisonment for various offences. The purpose of this move is to reduce the litigation burden on the companies.
In this backdrop, the Companies (Amendment) Act, 2020 has removed the imprisonment for offences which relates to non-compliance with the order of National Company Law Tribunal (NCLT) such as matters relating to winding up of companies, variation of rights of shareholders, payment of interest and redemption of debentures etc. In CSR also, where earlier, the penalty for any default was improvement and fine has now been amended to fine only.
Also, the imprisonment for non-compliance with the buyback provisions and lapses in Financial Statements has also been removed. And, some sections were also decriminalized where the complainants can enter into a compromise and agree to have the charges dropped against the accused. Further, if any person fails to make a declaration of significant beneficial ownership, the minimum penalty has been reduced to half by Rs. 50,000 and in case of continuous failure, Rs. 1000 per day upto a maximum level of Rs. 2,00,000.
