Decriminalization of corporate offences

Indian billionaire businessman and the head of the Godrej Family once said “Corporate governance should be done more through principles than rules”. The manner, method best criminal lawyer in bangalore and mode by which companies are directed and controlled is termed as corporate governance. The Companies Act, 2013 provides a robust framework for corporate governance.

In order to promote better corporate compliance, facilitate ease of doing business, reduce encumbrance on the criminal justice system, avoid the backlog of cases, strict vigilance over grave offences and in addition to this, motivate corporate institutions to adopt neat and transparent business practices, maintain a balance between the companies’ interest and the public interest and also to reduce the compliance costs.

The Ministry of Corporate Affairs (MCA) decriminalized various offences under the Companies Act, 2013 with the introduction of the Companies (Amendment) Act, 2019 and the Companies (Amendment) Act 2020 with the belief that this will ultimately increase FDI and will motivate Indian businesses to flourish in India. As such, decriminalization will put a bar on the preconceived notion that the regulatory landscape of India is fluctuant, erratic and onerous.

The Coronavirus pandemic brutally worsened the already parlous Indian economy. To cope with the economic hardships and to revive economic growth, decriminalisation of certain corporate offences was deemed to be one of the best options. This article discusses the need to decriminalize corporate offences owing to smoother facilitation of corporate governance.

An overview of changes introduced for governing corporate offences
In July 2018, a committee was set up by the MCA to review offences.
In August 2018, the committee submitted its report and recommended that the offences that are technical and procedural should adopt an in-house adjudication mechanism.

In July 2019, Amendments were made accordingly and as a result, The Companies (Amendment) Act, 2019 was passed.
In September 2019, the Government still felt the need to make the penal provisions lenient. Therefore, the Company Law Committee (CLC) was constituted.
In November 2019, CLC released its report and marked the recommendations for further recategorization. The report was submitted to MCA.

In March 2020, the Ministry of Finance introduced the Companies (Amendment) Bill 2020 proposing extensive and exhaustive amendments to the Companies Act, 2013.
In September 2020, the bill was passed in both houses. Eventually, The Companies (Amendment) Act, 2020 received the assent of the President of India.