New Delhi: Minor corporate offences will no longer be tried in a court, but will be decided upon by government officials under a toned down penalty framework.
President Ram Nath Kovind on Friday promulgated an Ordinance to amend the Companies Act, 2013 making penal provisions less onerous for procedural lapses and technical breaches. The Companies (Amendment) Ordinance, 2018 modernises the penalty provisions for minor offences and is expected to cut down the number of cases reaching company law tribunals and courts.
The Ordinance posted on the government’s e-gazette website amends 32 provisions in the company law to introduce an inhouse adjudication system for minor offences.
Prime Minister Narendra Modi said during a public event to launch an outreach programme to boost access to credit and compliance relief for micro, small and medium enterprises (MSMEs) on Friday that a large number of cases relating to minor violations of company law are pending in courts. “These are in lakhs. More than 60% of the cases in different courts will be dropped (as a result of the Ordinance)," he said. The prime minister said that the new system will speed up adjudication.
An official statement from the finance ministry said that as per the Ordinance, entrepreneurs will no longer have to approach courts for minor violations under the Companies Act, but can correct them through simple procedures.