Finance Minister Nirmala Sitharaman, while announcing the fifth and the final tranche of the economic stimulus package on Sunday, said the government will soon move an ordinance to decriminalise Companies Act violations involving minor technical and procedural defaults.
The government has decided to drop seven compoundable offences, while five will be dealt with under an alternative framework.
The violations that will be decriminalised include minor technical and procedural defaults like shortcomings in CSR reporting, inadequacies in board report, filing defaults and delay in holding AGM.
"Majority of the compoundable offences sections to be shifted to internal adjudication mechanism (IAM) and powers of RD for compounding enhanced," the government stated in the presentation, adding 58 sections will be dealt with under IAM as compared to 18 earlier.
It added that amendments will de-clog the criminal courts and NCLT.
Earlier in the day, Finance Minister said reforms will be the focus of the fifth and final tranche of economic stimulus package to deal with the economic fallout of the COVID-19 pandemic.
She said the package would focus on MGNREGA, healthcare and education, businesses, de-criminalisation of the Companies Act, ease of doing business, public sector undertakings, and resources related to state government.
Further, the government also said any debt default due to covid-19 shall be excluded from default under Insolvency and Bankruptcy Code (IBC). No fresh insolvency proceeding will be initiated for a year against any company. This has been done keeping in mind that covid has hurt businesses and many defaults could happen as a result. A special insilvency framework will be created to protect micro, small and medium enterprises from fresh IBC proceedings.
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