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.