Lok Sabha Question No. 243 (STARRED), answered on 2023-08-07
Subject: Decriminalisation of Compoundable Offences under Companies Act, 2013
Ministry: CORPORATE AFFAIRS
Asked by: Anil Firojiya

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA STARRED QUESTION NO. 243 ANSWERED ON MONDAY, AUGUST 07, 2023 SARAVAN 16, 1945 (SAKA)

DECRIMINALISATION OF COMPOUNDABLE OFFENCES UNDER COMPANIES ACT, 2013

## QUESTION

*243. SHRI ANIL FIROJIYA:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

(a) the details of the manner in which the Government is working to clear its pending cases by taking steps towards decriminalizing compoundable offences under the Companies Act, 2013 and showing strong commitment to ease of doing business;

(b)  whether  any  agreement  has  been  signed  between  the  Institute  of Chartered  Accountants  of  India  and  the  Chartered  Accountants  of  the Maldives; and

(c) if so, the details thereof?

## ANSWER

THE MINISTER OF FINANCE & CORPORATE AFFAIRS

[SMT. NIRMALA SITHARAMAN]

- (a) to (c):- A statement is laid on the Table of the House.

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## STATEMENT REFERRED TO IN REPLY TO LOK SABHA STARRED QUESTION NO. *243 FOR ANSWER ON 07.08.2023.

(a) :-  In  keeping with the Government's objective of incentivizing compliance with law and providing greater ease of doing business to law abiding corporates, process of de-criminalization of technical & procedural violations under Companies Act,  2013  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 (IAM). A principle-based  approach  was  adopted  and  only  those  violations  which  involved technical & procedural violations which could be objectively determined and did not involve any element of fraud, deceit, injury to public interest were decriminalized.

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 of imprisonment were removed and only fines were retained.

These amendments were based on the recommendations of the Companies Law Committee  and  are  expected  to  significantly  enhance  the  confidence  of  Indian companies on the Government's resolve to provide greater Ease of living & accord due respect to honest wealth creators in the country and reduce the burden on the criminal Justice system.

(b)  and  (c):-  The  Memorandum  of  Understanding  (MoU)  between  the  Institute  of Chartered Accountants of India (ICAI) and the Institute of Chartered Accountants of Maldives (CA Maldives) has been approved by the Union Cabinet at its meeting held on 17th May 2023. The MoU signing ceremony is scheduled to be held on 20th August 2023  in  Maldives  during  the  sidelines  of  South  Asian  Federation  of  Accountants (SAFA) events being hosted by CA Maldives. The objective of MoU is to establish mutual co-operation for the advancement of Accounting Knowledge, Professional and Intellectual Development, advancing the Interests of their respective members and  positively  contributing  to  the  development  of  the  Accounting  Profession  in Maldives and India.

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