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Changes in Companies Act

Date: 21 May 2020 Tags: Bills & Laws


Finance and corporate affairs minister Nirmala Sitharaman announced that the government was moving to decriminalise provisions of the Companies Act to enhance ease of doing business in the country as part of the government Covid-19 relief package.



The move, which was initially announced on March 4, is part of a larger effort by the government since 2018 to remove criminal penalties from all provisions of the Companies Act, except provisions dealing with fraudulent conduct.



  • A number of offences previously classified as compoundable offences, i.e. those offences that had either imprisonment or fines as punishments have had the imprisonment penalty removed.

  • Some of these offences have been omitted altogether while others have been shifted from the purview of the National Company Law Tribunals (NCLT) to an in-house adjudication mechanism.

  • The recently decriminalised offences include administrative offences such as delays in filing CSR reports, or failure to rectify the register of members in compliance with orders from the NCLT.

  • The government had also introduced amendments to the Companies Act making violations of the Corporate Social Responsibility (CSR) provisions punishable by imprisonment but did not operationalise the provision after feedback from industry.

  • A number of these offences have been moved from needing to be prosecuted through the National Company Law Tribunals to being dealt with by the Registrar of Companies.

  • The RoC is empowered to decide penalties for these offences and companies can appeal to the Regional Director (RD) of the Ministry of Corporate Affairs (MCA) to appeal or seek modifications to these decisions. 

  • The ministry is expected to come out with further measures to decriminalise provisions in the companies act particularly those relating to auditors.

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