Introduction

Companies Act, 2013 was enacted on 29^th August 2013 with the intent to implement a stringent provision to curb malpractices and to remove the flaws of the Companies Act, 1956. The new Act also focused to provide ease of business and to bring greater transparency in the conduct of business.  However, the new Act did not satisfy the expectation and hence, time to time changes was introduced to control the violations. Even, NCLT was approached by the persons for each small and big problems. These resulted in lodged of numerous petition of both important and simple matters.

In order to make the above thing in order, the Ministry of Corporate Affair (MCA) has constituted 10 member committees whose responsibility would be to review the penal provisions of the Companies Act, 2013

The main objective of setting up of the above committee is to review the offences under the companies’ act, 2013 as there are some of the offences which may be required to be considered as de-criminalized. It shall be the main responsibility of the committee to review the offences i.e. offences punishable with fine only or punishable with fine or imprisonment or both. This step shall allow the NCLT to have its focus on matters of serious nature.

This committee which is headed by MCA secretary would be required to submit its report within 30 days to the central government for consideration of its recommendation and taking further steps accordingly.

This committee has also been asked to submit that whether any non-compoundable offence should be considered as compoundable or not.

The terms of reference of the Committee are as follows:

1. To examine the nature of all ‘acts’ categorised as compoundable offences viz. offences punishable with fine only or punishable with fine or imprisonment or both under the CA-13 and recommend if any of such ‘acts’ may be re-categorised as ‘acts’ which attract civil liabilities wherein the company and its ‘officers in default’ are liable for penalty
2. To review the provisions relating to non-compoundable offences and recommend whether any such provisions need to be re-categorised as the compoundable offence
3. To examine the existing mechanism of levy of penalty under the Companies Act 2013 and suggest any improvements thereon
4. To lay down the broad contours of an in-house adjudicatory mechanism where the penalty may be levied in an MCA21 system driven manner so that discretion is minimised
5. To take necessary steps in the formation of draft changes in the law
6. Any other matter which may be relevant in this regard