MCA has constituted a 10-Member Committee to review the offences under the Companies Act, 2013
The Ministry of Corporate Affairs (MCA) has constituted a 10 Member Committee, headed by the Secretary of Ministry of Corporate Affairs, for review of the penal provisions in the Companies Act, 2013 may be setup to examine ‘de-criminalisation’ of certain offences.
The MCA seeks to review offences under the Companies Act, 2013 as some of the offences may be required to be decriminalised and handled in an in-house mechanism, where a penalty could be levied in instances of default. This would also allow the trial courts to pay more attention on offences of serious nature. Consequently, it has been decided that the existing compoundable offences in the Companies Act – 2013 viz. offences punishable with fine only or punishable with fine or imprisonment or both may be examined and a decision may be taken as to whether any of such offences may be considered as ‘civil wrongs’ or ‘defaults’ where a penalty by an adjudicating officer may be imposed in the first place and only consequent to further non-compliance of the order of such authority will it be categorised as an offence triable by a special court.
It is also required to be seen as to whether any non-compoundable offences viz. offence punishable with imprisonment only, or punishable with imprisonment and also with fineunder the Companies Act, 2013 may be made compoundable. The Committee shall submit its report within thirty days to the Central Government for consideration of its recommendations.
The terms of reference of the Committee are as follows:
1. To examine the nature of all ‘acts’ categorised as compoundable offences viz. offences punishable with fine only or punishable with fine or imprisonment or both under the CA-13 and recommend if any of such ‘acts’ may be re-categorised as ‘acts’ which attract civil liabilities wherein the company and its ‘officers in default’ are liable for penalty;
2. To review the provisions relating to non-compoundable offences and recommend whether any such provisions need to be re-categorised as compoundable offence;
3. To examine the existing mechanism of levy of penalty under the CA-13 and suggest any improvements thereon;
4. To lay down the broad contours of an in-house adjudicatory mechanism where penalty may be levied in a MCA21 system driven manner so that discretion is minimised;
5. To take necessary steps in formulation of draft changes in the law;
6. Any other matter which may be relevant in this regard.
The Committee’s constitution, under the Chairmanship of Secretary, is the following:
| (1) | Secretary, Ministry of Corporate Affairs | Chairperson |
| (2) | Shri T.K. Vishwanathan, Former Secretary General Lok Sabha and Chairman, BLRC | Member |
| (3) | Shri Uday Kotak, MD, Kotak Mahindra Bank | Member |
| (4) | Shri Shardul S Shroff, Executive Chairman, Shardul Amarchand Mangaldas & Co. | Member |
| (5) | Shri Ajay Bahl, Founder Managing Partner, AZB & Partners | Member |
| (6) | Shri Amarjit Chopra, Senior Partner, GSA Associate | Member |
| (7) | Shri Arghya Sengupta, Vidhi Centre for Legal Policy | Member |
| (8) | Shri Sidharth Birla, Former President, FICCI | Member |
| (9) | Ms. Preeti Malhotra, Partner and Executive Director of Smart Group | Member |
| (10) | Joint Secretary (Policy), Ministry of Corporate Affairs | Member-Secretary |
Source- PIB
Relevant MCA order is as follows:-
F. No. 2/1/2018-CL.V
Government of India
Ministry of Corporate Affairs
‘A’ Wing, 5th Floor, Shastri Bhawan
New Delhi: – 110001
Dated: 13 July, 2018
ORDER
Subject:- Constitution of Committee to review the offences under the Companies Act, 2013.
The Government hereby constitutes a Committee to review the offences under the Companies Act, 2013, consisting of the following:-
| Sr. No. | Name of Person/Institution | Position |
| 1 | Secretary, MCA | Chairperson |
| 2 | Shri T.K. Vishwanathan, Ex-Secretary General, Lok Sabha | Member |
| 3 | Shri Shardul S Shroff, Executive Chairman Shardul Amarchand Mangaldas & Co. | Member |
| 4 | Shri Ajay Bahl, Founder Managing Partner, AZB & Partners | Member |
| 5 | Shri Amarjit Chopra, Senior Partner, GSA Associate | Member |
| 6 | Shri Uday Kotak, MD, Kotak Mahindra Bank | Member |
| 7 | Shri Arghya Sengupta, Vidhi Centre for Legal Policy | Member |
| 8 | Shri Sidharth Birla, Past President, FICCI | Member |
| 9 | Ms. Preeti Malho tra, Partner and Executive Director of Smart Group | Member |
| 10. | Joint Secretary (Policy) | Member Secretary |
2. The Committee may invite or co-opt subject matter experts relating to corporate law or any other subject matter, as well as experts from SEBI, RBI, C&AG as needed. The committee may also invite any other person or body in the interest of broad based consultation.
3. The terms of reference of the Committee would be as follows :
(i) To examine the nature of all ‘acts’ categorized as compoundable offences viz. offences punishable with fine only or punishable with fine or imprisonment or both under the CA-13 and recommend if any of such ‘acts’ may be re-categorized as ‘acts’ which attract civil liabilities wherein the company and its ‘officers in default’ are liable for penalty;
(ii) To review the provisions relating to non-compoundable offences and recommend whether any such provisions need to be re-categorized as compoundable offence;
(iii) To examine the existing mechanism of levy of penalty under the CA-13 and suggest any improvements thereon;
(iv) To lay down the broad contours of an in-house adjudicatory mechanism where penalty may be levied in a MCA21 system driven manner so that discretion is minimized;
(v) To take necessary steps in fo 1 ‘illation of draft changes in the law;
(vi) Any other matter which may be relevant in this regard.
4. Non-official members of the Committee will be eligible for travelling, conveyance and other allowances as per extant Government instructions, wherever the sponsoring agency is unable to bear their expenditure. Secretarial support to the Committee will be given by the Ministry of Corporate Affairs.
5. The Committee shall submit its recommendations within thirty days of its first meeting.
(Pranay Chaturvedi)
Deputy Director
Phone: 23071190
There are certain compliance which are just there in any legislation for better practice and non compliance of the same do not affect any one. Where as over enthusiastic Regulators take action on that. This type of amendment will improve the quality of compliance for the betterment of all stakeholders. As I understand fine and penalties are exception and compliance is the rule of law. Thanks for EODB