New Delhi: Finance Minister Nirmala Sitharaman said, here on Wednesday, the changes approved by the Cabinet were aimed at de-criminalization of provisions of the Companies Act, 2013 and was in line with the intent to make doing business in the country easier.
The amendments to the Act pertain to the removal of sections that result in criminalization.
The Cabinet had suggested 72 changes to 65 sections of the Act with a focus on decriminalizing the law. Of the 66 compoundable offenses, 23 have been decriminalized and the rest will be dealt with under an in-house adjudicating framework.
Of these, 7 compoundable offenses will be omitted and punishment for 11 other compoundable offenses be limited to fine and no imprisonment. Five offenses will now be dealt with under different alternative frameworks, according to the Finance Minister.
She said the quantum of penalties for six defaults, decriminalized earlier, would also be reduced. The ‘ease of doing business’ in the country was the government’s motto and the cabinet decision was aimed at that, she added.
According to sources, the adjudicating framework has a faceless and non-discriminatory approach, ruling out any bias.
The cabinet has also exempted some companies from having the company's social responsibility (CSR) panels.
According to sources, 20,000 companies are taking part in CSR activities in India. Of this, 5,000 have CSR annual expenditures of Rs 50 lakh and account for 80 percent of the CSR spend.
The amendment to the Companies Act would affect 15,000 companies with below Rs 50 lakh CSR spending. The companies that spend over the obligated 2 percent on the CSR in a particular year can carry forward as credit for the fulfillment of the CSR obligations for the next few years as well.
It will be the second amendment to the Companies Act in the past year. The Act was amended last year to ensure the strict implementation of the CSR norms. (IANS)