Compounding of Offences Under the Companies Act, 2013
The Companies Act, 2013 provides for the compounding of certain offences committed by companies or their directors, officers, and other employees. The Act empowers the National Company Law Tribunal (NCLT) or the Regional Director (RD) to compound the offences committed under the Act. The compounding of offences under the Companies Act, 2013 is a process of settling a criminal case outside of court. In compounding of offences, the accused company or person agrees to pay a sum of money or perform some other form of compensation to the government, in exchange for the withdrawal of the charges.
Procedure for compounding of offences under Companies Act, 2013
The company or the person committing the offence must make an application to the NCLT or the RD, requesting that the case be compounded. The application should be made in the prescribed form and should be accompanied by a compounding fee as specified under the Act.
The NCLT or the RD will then call the company or the person committing the offence for a hearing to discuss a possible settlement. The hearing will be conducted in accordance with the principles of natural justice and the company or the person committing the offence will be given an opportunity to be heard.
If both parties agree to the settlement, the NCLT or the RD will pass an order compounding the offence. The order of compounding will contain the terms and conditions of the settlement, including the amount of compounding fee to be paid by the company or the person committing the offence.
The order of compounding will be final and binding on the company or the person committing the offence, and the case will be closed.
It is important to note that not all offences under the Companies Act, 2013 can be compounded. Offences that are not compoundable, such as fraud or misfeasance, cannot be settled outside of court. The Act specifically provides that the offences which are punishable with imprisonment shall not be compounded. Additionally, if the company or person have committed the same offence in the past, that would also be a ground for not compounding the case.
The compounding of offences under the Companies Act, 2013 serves as an alternative to prosecution in a court of law. It is a less time-consuming and less expensive way of resolving a criminal case. The compounding of offences also serves as an incentive for companies and persons to comply with the provisions of the Act. In many cases, the compounding fee is much less than the fine that would be imposed by a court, making it a more cost-effective option for companies and individuals.
Condonation of Offences Under the Companies Act, 2013
The Companies Act, 2013 does not provide for the condonation of offences committed by companies or their directors, officers, and other employees. Condonation of offences refers to the process of forgiving or pardoning an offence that has been committed. Under the Act, the only way to settle the offence is via compounding as described above or through prosecution in the court of law.
If the offence is not compoundable and the company or the person committing the offence is found guilty, they may face penalties or imprisonment as provided under the Act. The Act provides for various penalties for non-compliance with its provisions, including fines, imprisonment, and disqualification of directors. The penalties under the act are imposed to ensure compliance with the provisions of the act and to act as a deterrent to others.
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