Promulgation of the Companies Amendment (Ordinance), 2018

• The recommendation of the Union Cabinet for promulgation of the Companies Amendment (Ordinance), 2018 has been assented to by the President of India.

• The Ordinance, which has been promulgated today is based on the recommendations of the Committee appointed by the Government to review offences under the Companies Act, 2013.

Key highlights

• Shifting of jurisdiction of 16 types of corporate offences from the special courts to in-house adjudication, which is expected to reduce the case load of Special Courts by over 60%,thereby enabling them to concentrate on serious corporate offences. With this amendment the scope of in-house adjudication has gone up from 18 Sections at present to 34 Sections of the Act.

• The penalty for small companies and one person companies has been reduced to half of that applicable to normal companies.

• Instituting a transparent and technology driven in-house adjudication mechanism on an online platform and publication of the orders on the website.

• Strengthening in-house adjudication mechanism by necessitating a concomitant order for making good the default at the time of levying penalty, to achieve the ultimate aim of achieving better compliance.

• Declogging the NCLT by:

i. enlarging the pecuniary jurisdiction of Regional Director by enhancing the limit up to Rs. 25 Lakh as against earlier limit of Rs. 5Lakhunder Section 441 of the Act;

ii. vesting in the Central Government the power to approve the alteration in the financial year of a company under section 2(41); and

iii. vesting the Central Government the power to approve cases of conversion of public companies into private companies.

———————————————

Mains Paper 3: Economy | Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth

Prelims level: Particulars of the Ordinance

Mains level: Easing norms for minor corporate offences

Share article