Decriminalising offences, allowing direct overseas listing of companies, relaxing CSR norms and setting up National Company Law Appellate Tribunal (NCLAT) benches are among the proposals in the latest bill to amend the companies law.
The Companies (Amendment) Bill, 2020 was introduced in the Lok Sabha on Tuesday.
Various provisions of the Companies Act, 2013 would be amended for decriminalising defaults that “lack any element of fraud or do not involve larger public interest”, according to the Statement of Objects and Reasons of the bill.
Apart from allowing direct listing of Indian companies in permissible foreign jurisdictions, the bill seeks to empower the central government to exclude certain classes of companies from the definition of ‘listed company’, mainly for listing of debt securities.
The exclusion would be done only after consultations with markets regulator Sebi.
Companies that have CSR obligations up to Rs 50 lakh would not be required to set up a committee in this regard. Also, entities that have spent in excess of their CSR obligation in a particular fiscal would be permitted to set off that excess amount in the coming financial years.
Other proposals include setting up of NCLAT benches and allowing payment of adequate remuneration to non-executive directors in case of inadequate profits. The latter would be done by aligning the same with the provisions for remuneration to executive directors in such cases.
Lesser penalties for small and one person companies as well as reduction in timelines for applying for rights issues have been proposed in the bill.
The government also proposes to provide greater ease of living to corporates through certain amendments, as per the statement.
On March 4, the Union Cabinet approved 72 changes to the companies law. The same day, Corporate Affairs Minister Nirmala Sitharaman said the priority was to “decriminalise” provisions in the Act.
There would be 72 changes resulting in amendments to 65 sections of the Act and the aim is to ensure greater ease of doing business as well as living.
Sitharaman, who is also the finance minister, had said 23 offences would be recategorised out of 66 compoundable offences under the Act. Besides, seven compoundable offences would be omitted, she had said. PTI RAM