The Government of India informed the Lok Sabha about ongoing regulatory reforms aimed at deregulating offences under the Companies Act, 2013 to promote a trust-based business environment and improve ease of doing business. The process of decriminalization of technical and procedural violations has been implemented in phases. In the first phase, through the Companies (Amendment) Act, 2019, 16 compoundable offences were shifted to an In-house Adjudication Mechanism. In the second phase, through the Companies (Amendment) Act, 2020, an additional 35 compoundable offences were decriminalized. Furthermore, imprisonment provisions were removed for 11 compoundable offences, leaving only monetary penalties. These reforms aim to reduce litigation burden, lower compliance costs for businesses, and improve enforcement efficiency. Although the Ministry has not conducted a specific formal assessment of the reforms, it noted that criminal court burdens have decreased and cases handled through in-house adjudication have increased. The Government also clarified that there is currently no proposal to establish a Corporate Compliance Facilitation Centre for MSMEs and startups in the Bhiwani–Mahendragarh constituency of Haryana.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 2546
ANSWERED ON MONDAY, MARCH 09, 2026
PHALGUNA 18, 1947 (SAKA)
DEREGULATION OF OFFENCES UNDER THE COMPANIES ACT, 2013
QUESTION
2546. Shri Pradeep Kumar Singh:
Shri Yaduveer Wadiyar:
Shri Vijay Kumar Dubey:
Shri Lumbaram Choudhary:
Shri Kota Srinivasa Poojary:
Shri Yogender Chandolia:
Shri Tejasvi Surya:
Shri Haribhai Patel:
Shri Krishna Prasad Tenneti:
Shri Bhartruhari Mahtab:
Dr. Sanjay Jaiswal:
Shri Rajkumar Chahar:
Shri Dharambir Singh:
Will the Minister of CORPORATE AFFAIRS
be pleased to state:
a. the status of deregulation of offences under the Companies Act, 2013 as part of the Government’s trust-based regulatory reforms;
b. the number and categories of offences shifted to civil penalties or in-house adjudication mechanisms, if so, the details thereof;
c. the impact of these measures on litigation burden, compliance costs and enforcement efficiency;
d. whether any review or assessment has been undertaken to evaluate the outcomes of these reforms in terms of ease of business and improved voluntary compliance, if so, the details thereof; and
e. whether the Government proposes to establish a Corporate Compliance Facilitation Centre for MSMEs and startups in Bhiwani– Mahendragarh Lok Sabha Constituency in Haryana to support emerging industries in the region and if so, the details thereof?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF CORPORATE AFAIRS AND MINISTER OF STATE IN THE MINISTRY OF ROAD, TRANSPORT AND HIGHWAYS
[SHRI HARSH MALHOTRA]
(a) to (c): In keeping with the Government’s objective of providing greater ease of doing business to law abiding corporates, process of de-criminalization of technical & procedural violations under Companies Act, 2013 w was carried out in phased manner. In the first phase, through the Companies (Amendment) Act, 2019, 16 compoundable offences under the Companies Act, 2013 were shifted to an In-house Adjudication Mechanism.
In the second phase, through the Companies (Amendment) Act, 2020, 35 more compoundable offences under the Companies Act, 2013 were de-criminalized. In addition, through this amendment, in case of 11 compoundable offences, provisions for imprisonment were removed and only fines were retained.
This initiative has reduced litigation burden and compliance costs and has strengthened the enforcement efficiency.
d. No such specific assessment has been carried out by the Ministry. However, the de-criminalization of various offences under Companies Act, 2013 has reduced the burden on criminal courts and the number of cases under In-house Adjudication Mechanism have increased.
e. No such proposal is under consideration.
