Discuss the significance of decriminalising offences under the companies (amendment) bill 2020 to improve the ease of doing business in the country.(200 Words)
Refer - The Indian Express
Enrich the answer from other sources, if the question demands
IAS Parliament 5 years
KEY POINTS
Significance
· Lesser penalties for certain offences: Section 446B is amended to provide that non-compliance by One Person Companies, Small Companies, Start-up Companies or Producer Companies, or by any of its persons or officer in default, are only liable to one-half the penalty specified in the respective provisions, subject to a maximum of Rs. 2 lakh in case of a company and Rs. 1 lakh in case of person or default officer.
· Benefit to Independent Directors (ID): IDs have been recently in the spotlight for corporate lapses and violations. The amendments are vital for IDs to dissociate them from personal liabilities of the operational lapses and violations, especially when the offence has been committed without any evidence attributing knowledge, consent, connivance, or lack of diligence of the IDs.
· The aforementioned recommendations endeavour to simplify and accelerate the processes of rectifying defaults by paying penalties, instead of fighting a criminal trial. It also benefits the State by reducing the burden on courts, allowing them to focus on serious offences.
These amendments are admirable steps towards the three-pronged goal of:
· reducing the burden on company courts,
· ensuring investor interests, and
· facilitating the ease of doing business while collaterally safeguarding and incentivizing senior management to remain invested. This could well be the step towards showing intent to incentivize domestic and global investments, especially post COVID-19.
