Companies Act 2020: Companies Act amendments notified; various offences decriminalised

Corporate offenders will no longer have to face imprisonment for procedural, technical or minor offences as per the changes to the Companies Act notified on Monday.

The latest amendments coming to effect from Monday also allowed a certain class of public companies to list overseas directly, increasing the range of foreign funds Indian companies can access.

Some 48 sections of the Act have been decriminalised and 23 of the remaining 66 compoundable offences can be dealt with by an in-house adjudicating mechanism.

Finance minister Nirmala Sitharaman had said in Parliament that the total penal provisions under the Act were brought down to 124 from 134 in the Companies Act, 2013.

Further, companies will face a reduced burden of fines that can be imposed over certain offences under the Act.

The government will have to specify the class of companies that will be allowed to list overseas along with the permissible foreign jurisdictions.

The amendments also removed the requirement of instituting a corporate social responsibility (CSR) committee for companies whose CSR obligation was below Rs 50 lakh per year. Additionally, companies can roll over surplus CSR spends for the year.

Extension of relaxations

The ministry of corporate affairs (MCA) allowed companies to conduct board meetings through video conferencing or other audio visual means till the end of this year while extending the deadline by three months for independent directors to register with its online data bank.

The relaxation on the requirement of physical board meetings, granted by the MCA in light of restrictions arising from the pandemic, was ending on Wednesday. The new deadline is December 31.

The MCA had amended the rules for appointment of directors in December last year requiring them to register with an online data bank and consequently take a self-assessment exam to qualify them as eligible for such posts.

The deadline which was falling on October 1 has been extended to January 1, 2021.

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