On 17, March 2020 the Companies Amendment Bill (CAB) 2020 was introduced in the Lok Sabha. Anurag Thakur, Minister of State for Finance, proposed the bill and said that the bill will promote ethical and honest business in the nation.
The primary focus of the CAB 2020 is to decriminalise the major offences specified under the Companies Act of 2013. The bill was, however, criticised by the opposition saying that it is for the corporate, by the corporate and of the corporate and said that the legislation will further dilute the corporate social responsibility (CSR) of the corporate sector.
Anurag responded to the criticism by saying that the bill will make the process of CSR easy and that it did not intend to dilute it. In addition, he said that the bill proposes to decriminalise only the minor offences that do not harm the public but are becoming a burden on the legal framework and not decriminalise the corporates.
While the primary aim of CAB 2020 is to improve ease of doing business, it proposed 72 changes to the Companies Act of 2013 and the Union Cabinet approved it. Out of 66 compoundable offences under the Companies Act of 2013, 23 offences were recategorized and will be dealt with an in-house adjudication framework and seven compoundable offences were omitted.
The bill proposed to exempt companies whose CSR obligation is less than INR 50 lakh from constituting a CSR committee. Furthermore, it proposed to remove provisions of imprisonment in various sections and reduce penalties in case of various compoundable offences. In addition, the bill also proposed to lower the monetary penalties for violations by start-ups.
