The government introduced the Companies (Amendment) Bill, 2019, in the Lok Sabha on Thursday, which seeks to tighten corporate social responsibility compliance and reduce the load of cases on the National Company Law Tribunal (NCLT).
Finance and corporate affairs minister Nirmala Sitharaman said the bill seeks to replace the ordinance and that, along with certain other amendments, it is being brought in to “ensure more accountability and better enforcement to strengthen the corporate governance norms and compliance management in corporate sector”.
Opposition parties, however, slammed the government saying it wanted to enact the law in haste. Sitharaman said the bill was a necessity since the government had promulgated an ordinance on the subject twice in the past.
“A bill to replace the first ordinance was passed in Lok Sabha in January 2019 but could not get through in Rajya Sabha. Hence the second ordinance was promulgated in February. This bill has been brought to replace the second ordinance. We are not bringing the bill in haste,” said Sitharaman.
The Lok Sabha Speaker allowed the finance minister to introduce the bill after noting that he had already given a ruling that from the next session at least two days’ prior notice should be given to MPs before introduction of any bill. The bill has recategorised 16 ‘criminal’ offences under the Companies Act, including the failure to file annual returns and the issuance of shares at a discount to civil offences, allowing government officers to levy penalties instead of initiating criminal proceedings.
The legislation also grants regional directors of the ministry the power to settle offences with a penalty of Rs 25 lakh, a fivefold jump from Rs 5 lakh earlier. It also provides for allowing firms to transfer their unspent CSR funds to a separate account and empowers Centre to deal with violators. Besides, it seeks to enable the National Financial Reporting Authority.