AGovernment-appointed panel on Monday suggested restructuring of corporate offences under the companies law and an in-house adjudication mechanism to ensure that courts get more time to deal with serious violations.
The 10-member committee, which submitted its report to Corporate Affairs Minister Arun Jaitley, has made various recommendations as part of larger efforts to promote ease of doing business and better compliance levels.
Suggesting strict measures, the panel has pitched for disqualification of directors in case they have directorships beyond permissible limits and capping an independent director’s remuneration “in terms of percentage of income”.
Among other suggestions is de-registration of companies in case of non-maintenance of registered office.
Chaired by Corporate Affairs Secretary Injeti Srinivas, the committee was set up last month to review the existing framework dealing with offences under the Companies Act, 2013 and related matters and make recommendations to promote better corporate compliance.
Existing rigour of the law should continue for serious offences, covering six categories, whereas for lapses that are essentially technical or procedural in nature, mainly falling under two categories may be shifted to in-house adjudication process, the panel has recommended.
“The committee observed that this would serve the twin purposes promoting of ease of doing business and better corporate compliance.
“It would also reduce the number of prosecutions filed in the special courts, which would, in turn, facilitate speedier disposal of serious offences and bring serious offenders to book,” the release said.
The cross-cutting liability under section 447, which deals with corporate fraud, would continue to apply wherever fraud is found, it added.
Apart from restructuring of corporate offences to relieve special courts from adjudicating routine offences, the panel has mooted “re-categorisation of 16 out of the 81 compoundable offences” under the Act. The panel has recommended re-introduction of declaration of commencement of business provision.