On Tuesday (March 17), the minister of state for finance, Anurag Thakur introduced a bill in Lok Sabha to amend the Companies Act. It proposes 72 changes to removing criminality from a host of offences under the act and allowing for direct overseas listing of Indian companies.
Thakur said that the government was committed towards “ease of doing ethical business and ease of doing honest business”. The bill proposed 72 changes to the Companies Act, 2013. Almost 23 offences would be recategorised out of the 66 compoundable offences under the Act, to be dealt with through a internal adjudication framework. Besides, seven compoundable offences would be omitted.
Further, the minister said that the proposed decriminalisation was only for “minor procedural and technical defaults which do not involve fraud, injury to the public interest or non-compoundable offences”. The proposed amendments also include enabling provisions for the direct listing of securities of Indian public companies in permissible foreign jurisdictions.
The bill also seeks to exempt companies whose CSR obligation is below INR 50 Lakh from constituting a CSR committee. Additionally, the exemption provided to key managerial posts from government restrictions on compensation in case a company is facing liquidation, was expanded to include independent directors.
Earlier this month, union cabinet had approved the amendments in the companies act. Finance and corporate affairs minister Nirmala Sitharaman had said, “Out of 66 compoundable offences under the Act, 23 will get recategorised so that they can be dealt with through in-house adjudication framework, seven have been omitted altogether, 11 will have limited punishment in the form of fines alone by removing imprisonment provision, five will be dealt with under different alternative frameworks, six which had earlier been decriminalised will now have reduced quantum of penalties.”
The Indian government envisions to take the country into the top 50 in the global Ease of Doing Business rankings. For this, the ministry of corporate affairs had recently decided to simplify the registration process of startups.
India improved its rank for EoDB from 77th position in 2019 to 63rd in 2020 as mentioned in World Bank’s Doing Business 2020 report. It has come a long way from just five years ago. In 2014, out of 190 countries that were listed under World Bank’s index, India was in the 142nd spot.