Report of the 2nd Company Law Committee (2019) and the Companies (Amendment) Bill, 2020.
Reforming company law for facilitating ease of doing business in India
The 2nd Company Law Committee was set up in September, 2019 to suggest amendments to the Companies Act, 2013 for facilitating ease of doing business in India.
It undertook a review of criminal offences under the Companies Act, 2013 and recommended that minor non-compliances should not be treated as criminal punishments. It suggested that it would be more cost effective and time efficient to treat certain criminal offences as civil penalties instead. Such a framework of civil penalties would make conducting business easier as it would allow companies to pay penalties and become compliant rather than being stuck in criminal trials for several years with no outcomes.
The Committee also recommended changes to the corporate governance framework, the producer companies regime, capital raising rules and the adjudication system administered by the regional directors, among others.
The suggestions of the Committee were targeted at making business operations easier for law-abiding corporations. Further, by creating alternative structures to deal with minor non-compliances, the recommendations were also meant to reduce the burden on the National Company Law Tribunals and Special Courts entrusted with adjudicating on such non-compliances.
The Committee’s report was released in November, 2019. Many of its recommendations were included in the Companies (Amendment) Bill, 2020, which was introduced in the Parliament in March, 2020.
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About the Contributors
Aishwarya was a Senior Resident Fellow working in the area of Corporate Law and Financial Regulation. At Vidhi, she has primarily worked on engaged/commissioned projects from various ministries, statutory authorities and regulators, where she provides legal research and drafting support at various stages of law-making. Aishwarya works on a variety of legal and regulatory matters and allied issues in public policy, chiefly related to insolvency laws, competition laws and corporate governance laws. Aishwarya graduated with a B.A. LL.B (Hons.) from Jindal Global Law School (JGLS) in 2017. During her time there she worked on two human rights reports and attended specialised courses in Advanced Corporate Law and Competition Law. She has also interned under Senior Advocate Ramji Srinivasan, in Avantha Holdings Ltd. and in leading law firms.
Astha was a Senior Resident Fellow working in the area of Corporate Law and Financial Regulation. She completed her B.A.,LL.B. (Hons.) from the NALSAR University of Law in 2014 and her LL.M from the University of Cambridge in 2015.
Priyal Parikh was a Project Fellow at the Vidhi Centre for Legal Policy.
Saumya Jaju was a Project Fellow at the Vidhi Centre for Legal Policy.
