Government Promulgates Ordinance to amend Companies Act, 2013

Union Cabinet has approved proposal for promulgation of ordinance to amend the Companies Act, 2013.

• The ordinance had received assent from President Ram Nath Kovind under Article 123 and has been promulgated.
• The amendments to the Act are aimed to promote ease of doing business as well as ensure better compliance levels.

Details:

• The ordinance to change Companies Act seeks to declog National Company Law Tribunals (NCLTs) and decriminalise minor offences by companies.
• The ordinance will transfer 90% of the cases to regional directors under Ministry of Corporate Affairs from NCLTs.
• Moreover, it will retain status of all non-compoundable offences since they are serious in nature.

One must know:

• Union Government-appointed Committee (headed by Corporate Affairs Secretary Injeti Srinivas) had suggested various changes to Act, including restructuring of corporate offences under companies law and in-house adjudication mechanism to ensure that courts get more time to deal with serious violations.
• Apart from restructuring of corporate offences to relieve special courts from adjudicating routine offences, the committee had mooted re-categorisation of 16 out of 81 compoundable offences under the Act.
• This move was recommended to bring down NCLT's load as it looks at insolvency and bankruptcy cases as well.
• It also recommended disqualification of directors in case they have directorships beyond permissible limits and capping an independent director's remuneration. 
• It also suggested that remuneration that any independent director gets from the company should be capped at 20% of his gross income in a year to prevent any material pecuniary relationship, which could impair their independence on the board.

Question:

Q. Union Cabinet has approved a proposal for promulgation of ordinance to amend which Act?
a. Arms Act, 2013
b. Companies Act, 2013
c. Bankruptcy Act, 2013
d. None of the above