The Companies Act, 2013 (Act) has seen tremendous changes within a span of just 6 years of its coming into force. The frequent changes have posed challenges for all the stakeholders including corporates, business fraternity, professionals (like CS/CA/CMA/ Lawyers etc) as well as students.

As India is witnessing drastic economic slowdown, the present regime is under huge pressure for recovery from the same. This slowdown has resulted into huge unemployment and business loss in the Country. The stakeholders’ expectations were on the Budget 2020 whereby everyone was expecting some reform measures from the current Finance Minister i.e. Mrs. Nirmala Sitharaman (FM). As the Budget 2020 has been announced on 01st February, 2020, however it is the matter of debate that whether or not, the same has succeeded in fulfilling all/ any of the expectations.

The FM in her Budget Speech said:

“There has been a debate about building into statutes, criminal liability for acts that are civil in nature. Hence, for Companies Act, certain amendments are proposed to be made that will correct this.”

It is worth to be noted that a High-level committee (“Committee”) was formed by the Central Govt. on 18th September, 2019 to make recommendations to the Government inter alia on further re-categorisation of certain “criminal compoundable offences” to “civil wrongs” carrying civil liabilities and certain other changes to facilitate & promote ease of doing business & ease of living.

The committee has made far reaching recommendations to decriminalise 46 sections of the Companies Act 2013.

The focus is on raising compliance levels without criminalising minor offences which promotes ease of living,” said Corporate Affairs Secretary & Chairman of said Committee Mr. Injeti Srinivas.

The committee has proposed amendments in 46 penal provisions so as to either remove criminality, or to restrict the punishment to only fine, or to allow rectification of defaults through alternative methods.

This indeed is going to be a larger move by the government to decriminalise offences under the Companies Act. Earlier this year, it has passed an amendment re-categorising 16 offences as civil offences.


India is making rapid strides in improving its ease of doing business, and decriminalisation of corporate transgressions is a step in the right direction. This move, if implemented, will align with the Government’s aim to boost investor sentiments and increase the foreign direct investment. It will also encourage home-grown start-ups to set up business in India instead of flipping their businesses offshore. Many businesses founded by Indian citizens are incorporated in overseas jurisdictions because of the perception that the regulatory landscape of India is uncertain and onerous.

These measures reiterate the support of government for its EASE OF DOING BUSINESS Policy. So one can opine that the time has come when the law-abiding businessmen in India:

  • need not to worry about the law;
  • need to focus on business growth & development;
  • need to contribute towards national & global prosperity & sustainability.


Consequent to the announcement by Mrs. Nirmala Sitharaman, let’s wait for another amendment. The fact is that the existence of unnecessary criminal provisions in the corporate law is a deterrent to incorporation and inflow of foreign capital. There are nearly 60 instances where the imprisonment has been provided in the Act.  The proposed amendments should be made in a manner to give relief to the stakeholders on one hand while retaining the deterrent effect towards the wilful and intentional violations of the law.

(Author- CS Zaid Sofi, Company Secretary in Practice from Gurugram & can be contacted at [email protected])

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Qualification: CS
Company: Z S & Associates (Company Secretaries)
Location: Gurugram, Haryana, IN
Member Since: 02 Feb 2020 | Total Posts: 4

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May 2021