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Parliament Passes Bill to Amend Companies Act

CIO Insider Team | Tuesday, 22 September, 2020
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CIO Insider Team

A couple of days after Lok Sabha passed the bill to amend Companies Act (2013), Rajya Sabha has also passed the bill, decriminalizing an array of offenses. The Companies (Amendment) Bill, 2020 took a voice vote in Rajya Sabha to win the majority, despite many of the opposition MPs boycotting the proceedings in order to protest suspension of eight members. The Lok Sabha had approved the bill on September 19. With the new bill, around 48

sections of the Companies Act, 2013 are will be amended to decriminalize various offences.

The bill removes the penalty, imprisonment for nine offenses that tether to non-compliance with orders of the national company law tribunal (NCLT), and decreases the payable fine amount in certain cases. The scenarios include matters pertaining to winding-up of a company, default in publication of NCLT orders that are related to reducing share capital, rectification of registers of security holders, variation of rights of shareholders, and payment of interest and redemption of debentures.

The amended citations also include permitting direct overseas listing of Indian corporates securities in permissible foreign jurisdictions and more relaxed corporate social responsibility (CSR) requirement for companies. Their obligation was to spend Rs 50 lakh or less, wherein they will now not be required to constitute a committee for this. The bill has also introduced a new chapter pertaining to producer organizations, aiming to provide benefits to farmers.

On the other hand, the Union Minister of State for Finance and Corporate Affairs, Anurag Thakur recently has divulged that over 3.8 lakh shell companies were struck off under the Companies Act over the last three years.

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