Cabinet approves Companies (Second Amendment) Bill, 2019 - (04 Mar 2020)

Company

The Union Cabinet, chaired by the Prime Minister, has approved the Companies (Second Amendment) Bill, 2019 to amend the Companies Act, 2013. The changes are expected to lead to greater compliance by corporates, de-clogging of the special courts, de-clogging of the NCLT. The Bill would remove criminality under the Act in case of defaults which can be determined objectively and which, otherwise, lack the element of fraud or do not involve larger public interest. The Bill would also further ease of living for law abiding corporates.

At present around 60 percent of cases pending in Courts pertains to procedural lapses such as non-filing of financial statements and non-filing of annual returns etc. These are proposed to be shifted to in-house adjudication mechanism thereby incentivizing compliance by corporates. As a result of the amendments, in future, the compounding cases load on National Company Law Tribunal (NCLT) will also come down significantly. If such violations are re-categorized and allowed to be adjudicated in an in-house mechanism through payment of monetary penalties, the burden on special courts would be drastically reduced and more effective and speedy progress of the more serious cases would be possible.

Further, the Amendment Bill would enable the listing of Indian companies on stock exchanges in foreign jurisdictions. The listing of Indian companies in foreign stock exchanges is expected to increase the competitiveness of Indian companies in terms of access to capital, broader investor base and better valuations. The framework for enabling such listing under the foreign exchange and securities laws would be finalised by the Ministry of Finance in consultation with Ministry of Corporate Affairs, Reserve Bank of India and the Securities and Exchange Board of India.

Tags : BILL AMENDMENT APPROVAL