Ubion Budget 2020: Govt has proposed amendments to companies law, says Nirmala Sitharaman

Amendments have been proposed to the companies law, Finance Minister Nirmala Sitharaman said on Saturday as she highlighted the debate about criminal liability for acts that are civil in nature.

Presenting the Union Budget for 2020-21 financial year, she assured taxpayers that the government remains committed to taking measures so that they are free from any kind of harassment.

The corporate affairs ministry, which is also helmed by Sitharaman, would be seeking amendments to the Companies Act, 2013, to decriminalise various offences following recommendations from a high level committee last year.

"There has been a debate about building into statutes, criminal liability for acts that are civil in nature. Hence, for Companies Act, certain amendments are proposed to be made that will correct this. Similarly, other laws would also be examined, where such provisions exist and attempts would be made to correct them," Sitharaman said in her nearly 160-minute speech.

In November, the Company Law Committee -- chaired by Corporate Affairs Secretary Injeti Srinivas -- recommended decriminalising more than half of the existing compoundable offences under the companies law.

Amendments to 46 penal provisions, "so as to either remove criminality, or to restrict the punishment to only fine, or to allow rectification of defaults through alternative methods", have been suggested by the committee.

As per the committee's report, 23 out of the 66 remaining compoundable offences under the Companies Act could be re-categorised.

Such offences could then be dealt with in-house adjudication framework wherein these defaults would be subject to a penalty levied by an adjudicating officer, according to the report.

Generally, compoundable offences are those which can be settled by paying certain amount of money.

In 2019, the ministry de-criminalised 16 minor procedural/technical lapses under the Act into 'civil wrongs'.