New Delhi: Finance Minister Nirmala Sitharaman on Wednesday said that the changes approved by the Cabinet was aimed at de-criminalisation of provisions of the Companies Act, 2013 and was in line with the intent to make doing business in the country easier. Also Read - All Pending MSME Loans to be Restructured by March 15: Sitharaman
The amendments to the Act pertain to removal of sections that result in criminalisation.
The Cabinet had suggested 72 changes to 65 sections of the Act with focus on decriminalising the law. Of the 66 compoundable offences, 23 have been decriminalised and the rest will be dealt with under an in-house adjudicating framework.
Of these, 7 compoundable offences will be omitted and punishment for 11 other compoundable offences be limited to fine and no imprisonment. Five offences will now be dealt with under different alternative frameworks, according to the Finance Minister.
She said the quantum of penalties for six defaults, decriminalised earlier, would also be reduced. The ‘ease of doing business’ in the country was the government’s motto and the cabinet decision was aimed at that, she added.
According to sources, the adjudicating framework has the faceless and non-discriminatory approach, ruling out any bias.
The cabinet has also exempted some companies from having the company social responsibility (CSR) panels.
According to sources, 20,000 companies are taking part in CSR activities in India. Of this, 5,000 have CSR annual expenditures of Rs 50 lakh and account for 80 per cent of the CSR spend.
The amendment to the Companies Act would affect 15,000 companies with below Rs 50 lakh CSR spending. The companies that spend over the obligated 2 per cent on the CSR in a particular year can carry forward as credit for fulfilment of the CSR obligations for the next few years as well.
It will be the second amendment to the Companies Act in the past one year. The Act was amended last year to ensure strict implementation of the CSR norms.