An amelioration of various provisions of the Companies Law through a mandate was done by the Government on the 2nd of November.
This gesticulation has expected to reduce the pendency of cases before special courts by 60 percent besides bringing down pertinent penalties for bijou companies.
The enactment amending the Companies Act 2013 has been disseminated with twin grail of “promotion of ease of doing business along with better corporate compliance” as stated by a recent official release.
A ratification for the ordinance after the Union Cabinet cleared the proposal for propagated on the 1st of November was given by President Ram Nath Kovind on the 2nd of November.
A government-appointed panel that reviewed the offenses under the Act has made the amendments in the act on the basis of their recommendations.
Jurisdiction of 16 types of corporate offenses would be shifted from the special courts to in-house adjudication with the enforcement of the latest amendment.
The Corporate Affairs Ministry voiced during the release, “This is expected to reduce the caseload of special courts by over 60 percent, thereby enabling them to concentrate on serious corporate offenses. With this amendment, the scope of in-house adjudication has gone up from 18 Sections at present to 34 Sections of the Act.”
Prime Minister Narendra Modi, while addressing an event said that the companies law has been amended to give relaxation for Micro, Small and Medium Enterprises (MSMEs) from legal complexities.
There were provisions in the Act because of which small mistakes could lead to criminal proceedings against MSMEs as stated by the Indian Prime Minister.
Narendra Modi remarked, “Sometimes entrepreneurs landed in jail also which had impacted their respect and status… to rectify small mistakes they have to run from pillar to post in courts.”
In reference to the ordinance, Modi vocalized that all these injunctions have been changed and that the Micro, Small and Medium Enterprises (MSMEs) don’t have to run to courts to rectify small mistakes.
The MSMEs can visit the concerned departments and follow easy processes and rectify these mistakes.
The penalty for small as well as one person companies has been reduced to half of the amount that is applicable for normal companies as stated by the latest release of the Ministry.
A transparent and technology-driven in-house adjudication mechanism on an online platform and publication of the orders on the website would be in operation.
By necessitating a collateral order for making good the default at the time of levying a penalty, to achieve the ultimate aim of achieving better compliance the in-house adjudication mechanism would be strengthened.
The National Company Law Tribunal (NCLT) would be unclogged by way of expanding the financial jurisdiction of the Regional Director.
The Regional Director would deal with the offenses amounting to Rs 25 lakh. The earlier limit was Rs 5 Lakh.
The central government would have powers to approve the following:
- Alteration in the financial year of a company.
- Approve cases of conversion of public companies into private ones.
The advocation of the panel related to corporate acquiescence and corporate governance include re-introduction of pronouncement of the inception of the business provision to better equip the peril of shell companies.
There would be greater disclosure of public deposits, more accountability regarding filing documents related to creation, revamped, and satisfaction of charges.