• 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.
• 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