Overdue correction: on revisiting the Companies Act

 

Overdue correction: on revisiting the Companies Act

A relook at the overly harsh provisions of the Companies Act must yield action

The Centre has announced(घोषणा की) the constitution(संविधान) of a committee to revisit(पुनर्विचार करने/फिर से मिलना) several provisions(प्रावधानों) of the Companies Act, 2013 that impose(लगाया/प्रभाव डालना) stiff(कठोर) penalties and, in some cases, prison(जेल/कारागार) terms(मामले) as well, for directors and key management personnel(कर्मियों) . The 2013 law entailed(प्रवेश किया/अपरिहार्य) the first massive(बड़े पैमाने का) overhaul(पूरी मरम्मत) of India’s legal regime to govern businesses that had been in place since 1956 and was borne of a long-drawn consultative(सलाहकार ) process. Now, this 10-member committee appointed by the Corporate Affairs Ministry has been tasked with checking if certain(निश्चित/कुछ) offences can be ‘de-criminalised(आपराधिक) ’. The panel, which includes(शामिल करना/सम्मिलित करना) top banker Uday Kotak, has been given 30 days to work out whether some of the violations(उल्लंघन) that can attract(आकर्षित) imprisonment(कैद होना/कारावास ) such as a clerical(लेखन संबंधी/लिपिकीय) failure by directors to make adequate(पर्याप्त/उचित) disclosures(खुलासे/परदाफ़ाश) about their interests) may instead(बजाय/बदले में) be punished with monetary(मौद्रिक) fines. It will also examine(जांच करना/परीक्षण करना) if offences punishable with a fine or imprisonment may be re-categorised(फिर से वर्गीकृत किया) as ‘acts’ that attract civil liabilities(देनदारियों/उत्तरदायित्व) . Importantly, the committee has also been asked to suggest(प्रस्तावित/संकेत करना) the broad(विस्तृत/व्यापक) contours(आकृति/रूप-रेखा) for an adjudicatory(न्यायिक ) mechanism that allows penalties to be levied(लगाया/वसूल किया हुआ) for minor violations(उल्लंघन), perhaps in an automated manner, with minimal(न्यूनतम ) discretion(विवेक/निर्णय) available to officials. In fact, some of the provisions in the law are so tough that even a spelling mistake or typographical error could be construed(अर्थ लगाया) as a fraud and lead to harsh(कठोर) strictures(निंदा/बाध्यताओं)

The government hopes such changes in the regulatory(विनियामक/नियामक ) regime(व्यवस्था/शासन) would allow trial courts to devote greater attention(ध्यान) to serious offences(अपराधों/अपमान) rather than get overloaded with cases as zealous officials blindly(अंधाधुंध ) pursue(पीछा करना) prosecutions (मुकदमों/अभियोग) for even minor violations. The decision to build in harsh penalties and prison terms for corporate misdemeanours in the 2013 law was, no doubt, influenced(प्रभावित) by the high-pitched(तेज़/एकटक) anti-corruption discourse that prevailed(प्रबल) in the country at that moment in time. Apart from several cases of crony(घोर) capitalism(पूंजीवाद) that had come to light during(दौरान) the second UPA government, massive corporate frauds reported at once-revered(सम्मानित /श्रद्धेय) firms such as the erstwhile Satyam Computer Services had spooked investors and other stakeholders about the credibility (विश्वसनीयता)of corporate India’s books and governance standards. When the NDA came to power in May 2014, a comprehensive review of the Companies Act was at the top of industry’s wish list as a means to revive(पुनर्जीवित) the economy. Industry captains had red-flagged the impact(प्रभाव) of such provisions on the ease of doing business, and investor(निवेशक) sentiment(भावना/भाव) in general. A trust deficit(घाटा/कमी) between industry and government owing to stray(भटका हुआ/कोई-कोई) incidents of corporate malfeasance(दुर्भावना) should not inhibit(रोकना/मना करना) normal business operations, they had argued. Four years down the line, the government is finally moving purposefully(उद्देश्यपूर्ण) on this, a rethink(फिर से सोचना) perhaps(शायद/मुमकिन है) triggered(शुरू हो रहा/रोका गया) by the fact that private sector investment is yet to pick up steam and capital still seeks foreign shores to avoid regulatory risks. One hopes this is followed up on swiftly(तेजी से,), before the ruling party slips into election mode.

 

 

Important vocabulary

1.Revisit(फिर से मिलना/पुनर्विचार करने/)
Synonyms: call, frequent, return, stay, visit often
Antonyms: leave

2.Provisions(प्रावधानों)
Synonyms: board, chow, fare, feed, fodder

3.Stiff(कठोर)
Synonyms: arthritic, creaky, rigid, solid, stark
Antonyms: bending, flexible, loose, pliable, slack

4.Imprisonment(कैद होना/कारावास )
Synonyms: captivity, confinement, custody, incarceration, isolation
Antonyms: freedom, liberation, liberty, discharge, liberating

5.Examine(जांच करना/परीक्षण करना)
Synonyms:audit, check, check out, consider, criticize
Antonyms: approve, forget, ignore, neglect, praise

6.Includes(शामिल करना/सम्मिलित करना)
Synonyms: add, build, carry, combine, comprise
Antonyms: abandon, decrease, divide, drop, erase

7.Discretion(विवेक/निर्णय)
Synonyms: attention, foresight, maturity, prudence, responsibility
Antonyms: carelessness, disregard, ignorance, indiscretion, negligence

8.Harsh(कठोर)
Synonyms: bitter, bleak, grim, hard, rigid
Antonyms: bland, bright, calm, cheerful, easy

9.Strictures(निंदा/बाध्यताओं)
Synonyms: blame, criticism, obloquy, rebuke, reprobation
Antonyms: compliment, praise

10.Prosecutions (मुकदमों/अभियोग)
Synonyms: pursuit, accomplishment, achievement, execution, performance
Antonyms: defeat, failure, neglect

11.Inhibit(रोकना/मना करना)
Synonyms: constrain, curb, discourage, forbid, hinder
Antonyms: advance, aid, allow, assist, encourage

12.Swiftly(तेजी से,),
Synonyms: expeditiously, hastily, promptly, quickly, rapidly
Antonyms: slowly, sluggishly

13.Stray(भटका हुआ/कोई-कोई)
Synonyms: homeless, lost, roaming, roving, vagrant

 

 

 

Credit To The Hindu News Paper

The Centre has announced the constitution of a committee to revisit several provisions of the Companies Act, 2013 that impose stiff penalties and, in some cases, prison terms as well, for directors and key management personnel. The 2013 law entailed the first massive overhaul of India’s legal regime to govern businesses that had been in place since 1956 and was borne of a long-drawn consultative process. Now, this 10-member committee appointed by the Corporate Affairs Ministry has been tasked with checking if certain offences can be ‘de-criminalised’. The panel, which includes top banker Uday Kotak, has been given 30 days to work out whether some of the violations that can attract imprisonment (such as a clerical failure by directors to make adequate disclosures about their interests) may instead be punished with monetary fines. It will also examine if offences punishable with a fine or imprisonment may be re-categorised as ‘acts’ that attract civil liabilities. Importantly, the committee has also been asked to suggest the broad contours for an adjudicatory mechanism that allows penalties to be levied for minor violations, perhaps in an automated manner, with minimal discretion available to officials. In fact, some of the provisions in the law are so tough that even a spelling mistake or typographical error could be construed as a fraud and lead to harsh strictures.

The government hopes such changes in the regulatory regime would allow trial courts to devote greater attention to serious offences rather than get overloaded with cases as zealous officials blindly pursue prosecutions for even minor violations. The decision to build in harsh penalties and prison terms for corporate misdemeanours in the 2013 law was, no doubt, influenced by the high-pitched anti-corruption discourse that prevailed in the country at that moment in time. Apart from several cases of crony capitalism that had come to light during the second UPA government, massive corporate frauds reported at once-revered firms such as the erstwhile Satyam Computer Services had spooked investors and other stakeholders about the credibility of corporate India’s books and governance standards. When the NDA came to power in May 2014, a comprehensive review of the Companies Act was at the top of industry’s wish list as a means to revive the economy. Industry captains had red-flagged the impact of such provisions on the ease of doing business, and investor sentiment in general. A trust deficit between industry and government owing to stray incidents of corporate malfeasance should not inhibit normal business operations, they had argued. Four years down the line, the government is finally moving purposefully on this, a rethink perhaps triggered by the fact that private sector investment is yet to pick up steam and capital still seeks foreign shores to avoid regulatory risks. One hopes this is followed up on swiftly, before the ruling party slips into election mode.

Print Friendly, PDF & Email