Government Introduces Bill In Lok Sabha To Decriminalise Minor Procedural Lapses Under Companies Act

The government on Tuesday (17 March) introduced Companies (Amendment) Bill, 2020 in the Lok Sabha to decriminalise minor procedural or technical lapses under the Companies Act to ease the compliance burden on the corporate sector.

Introducing the Bill, Union Minister of State for Finance and Corporate Affairs Anurag Thakur said there will be no decriminalising of non-compoundable offences which deal with frauds and that such amendments are required if India has to become a $5 trillion economy.

Congress leader of House Adhir Ranjan Chowdhury, Biju Janata Dal's Bhartruhari Mahtab and Trinamool Congress leader Saugata Roy opposed the introduction of the Bill that seeks amendment to the Companies Act 2013.

Chowdhury accused the government of having "devilish infatuation with the corporate world", alleging that it was "of the corporates and by the corporates" and the government "is appeasing the corporate World". "Yes Bank is no bank. Instead of knowing your customer norm, there is a need to know your bank."

Mahtab said while the government was seeking to decriminalise some offences, frauds were being reported in banks. After the amendment, Mahtab, said the changes in the Act will help those who commit fraud and they find it easy to get away. He also accused the government of ad hoc approach and demanded that the Bill be referred to the standing committee.

Responding to opposition's argument against the Bill, the Minister said that the Bill seeks to decriminalise "minor procedural and technical defaults" and that the move was also aimed at reducing the burden on National Company Law Tribunal (NCLT).

"There will be no decriminalising of non-compoundable offences which deal with frauds. We are not reducing CSR (CSR) obligations but easing procedural requirements. It was our recommendation that the CSR should be part of the Companies Act at that time when the then government brought it hurriedly when they were going out of power. That is why the amendments were required."

The Minister said that the CSR obligations are not being diluted and that the government has already made CSR pending mandatory in Companies (Amendment) Bill, 2019. "Our government is committed towards ease of doing ethical business and ease of doing honest business."

Thakur asked what kind of environment you want in the country? "Do you want to criminalise everything?"

He said there is a second phase of decriminalisation process which the government has started through the Companies (Amendment) Act, 2019.

"The Companies Act 2013, which was passed in 2013 has several technical and procedural default. We are not decriminalising any provision which deal with fraud, injury to public interest and non-compoundable offences."

"We would like to adopt a balanced approach on this issue. Business are accorded due respect... There should be conducive environment where industry can create and generate employment. If India has to become a $ 5 trillion economy such amendments are also required."

(This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.)