Ordinance to alter Companies Act : 10-10-2018

NEW DELHI: The government is likely to promulgate an ordinance soon to make changes to the Companies Act with an aim to promote ease of doing business, ensure better corporate compliance and expedite insolvency proceedings.

The changes may include easing of various penal provisions in the Act and introduction of measures to unclog National Company Law Tribunal (NCLT) and special courts.

Finance and corporate affairs minister Arun Jaitley discussed the ordinance Tuesday in a meeting with railway and coal minister Piyush Goyal and commerce &industry and aviation minister Suresh Prabhu, among others.

The thrust of the changes is to decentralise power to regional directors and set up an in-house e-adjudication mechanism to deal with minor offences, which will free up the already overburdened NCLT and special courts.

The corporate affairs ministry is also seeking faster resolution in the IL&FS case and has suggested changes to the Act to empower the government-appointed IL&FS board of directors, an official said. “We have proposed that 16 out of the 81compoundable offences should be dealt through the inhouse e-adjudication mechanism, instead of going to special courts,” a corporate affairs ministry official said.

The 16 minor offences include failure to file timely resolutions and other declarations, and various non-serious and clerical errors. “The companies won’t have to go to special courts but will pay a penalty online through in-house e-adjudication,” the official said .

The ministry has also favoured referring routine matters such as conversions to privately-held from publiclyheld companies to regional directors.

That will help speed up the resolution of banks’ bad loans as the tribunals are central to the Insolvency and Bankruptcy Code (IBC) process. The government had earlier set up a committee to suggest changes to the Act. Its members included corporate affairs secretary Injeti Srinivas and Kotak Mahindra BankNSE 2.40 % MD Uday Kotak, who’s also on the new board of IL&FS.

Source : Economic times

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