Lok Sabha Question No. 1914 (UNSTARRED), answered on 2018-12-21
Subject: Review Committee on Companies Act
Ministry: CORPORATE AFFAIRS
Asked by: JAYADEV GALLA, PONNUSAMY VENUGOPAL

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

UNSTARRED QUESTION NO. 1914

ANSWERED ON FRIDAY, THE 21st DECEMBER, 2018

AGRAHAYANA 30, 1940 (SAKA)

## REVIEW COMMITTEE ON COMPANIES ACT

## QUESTION

1914.  SHRI JAYADEV GALLA: DR. P. VENUGOPAL:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

कारपोरेट कार्य मंत्री

- (a) whether the Government proposed to amend the Companies Act and if so, the details of amendments proposed by the Government ;
- (b) whether the Government also plans to make more amendments of urgent nature to  the  Companies  Act  including  certain  provisions  regarding  Corporate  Social Responsibility (CSR) spending and if so, the details thereof;
- (c) whether the Government has sought comments from stakeholders for proposed changes to the law and if so, the details thereof; and
- (d) whether a Committee to review the penal offences under the Act had suggested various amendments to the law and if so, the details thereof?

## ANSWER

MINISTER OF STATE FOR LAW AND JUSTICE                 (SHRI P. P. CHAUDHARY) AND CORPORATE AFFAIRS

(श्री पी. पी. चौधरी)

विवि और न्याय एिं कारपोरेट कायय मंत्रालय में राज्य मंत्री

(a) to (d):-  On the basis of report of the Committee to review offences under the Companies Act, 2013 (CA-13), the Companies (Amendment) Ordinance, 2018 (9 of 2018) has been promulgated on November 2, 2018.  The twin objectives of the Ordinance are promotion of ease of doing business along with better corporate compliance.  The main amendments are as under:-

- I. Shifting  of  jurisdiction  of  16  types  of  corporate  offences  from  the  special courts to in-house adjudication.  This is expected to reduce the case load of Special Courts by over 60%, thereby enabling them to concentrate on serious corporate offences.  With this amendment, the scope of in-house adjudication has gone up from 18 Sections at present to 34 Sections of the Act.
- II. The penalty for small companies and one person companies has been reduced to half of that applicable to normal companies.
- III. Strengthening in-house adjudication mechanism by necessitating a concomitant order for making good the default at the time of levying penalty, to achieve the ultimate aim of achieving better compliance.
- IV. Declogging the NCLT by:

(a)  enlarging  the  pecuniary  jurisdiction  of  Regional  Director    by  enhancing the  limit up to Rs. 25 Lakh as against earlier limit of Rs. 5 Lakh under Section 441 of the Act;

(b) vesting in the Central Government the power to approve the alteration in the financial year of a company under section 2(41); and

(c) vesting in the Central Government the power to approve cases of conversion of public companies into private companies.

- V. Other Amendments relate to re-introduction of provision pertaining to declaration of  commencement  of  business;  reduced  time  for  filing  documents  related  to creation  and  modification  of  charges;  non-maintenance  of  registered  office  to trigger de-registration process; and holding of directorships beyond permissible limits to trigger disqualification of such directors.

After the promulgation of the aforesaid Ordinance on 2nd November, 2018, a public notice  was  placed  on  the  website  of  the  Ministry  of  Corporate  Affairs  on  5 th November,  2018,  eliciting  public  comments  on  amendments  to  20  sections (including section relating to CSR spending) of the Companies Act, 2013. The last date  of  receiving  comments  from  the  public  was  20 th   November,  2018.  The comments  were  examined  and  it  was  decided  that  only  the  amendments suggested by the committee to review offences under the Companies Act, 2013 be carried out as of now.

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