The government has re-promulgated an ordinance to amend the companies law that seeks to plug critical gaps in corporate governance, ensure better compliance levels as well as further improve the ease of doing business. Recently, the Union Cabinet chaired by Prime Minister Narendra Modi has approved the Promulgation of the Companies (Second Amendment) Ordinance 2019.
A bill to replace the Companies (Amendment) Ordinance, 2018, that was promulgated in November could not be passed during the last session of the current Parliament. The amendments have been brought in to address the need to impose civil liability for technical & procedural defaults of a minor nature & to plug gaps in the corporate governance & enforcement framework covering a wide range of issues.
As many as 16 minor offences have been re-categorised as ‘purely civil defaults’ which would help de-clog special courts. Besides, certain routine functions from the National Company Law Tribunal (NCLT) would be transferred to the central government. These include dealing with applications for change of financial year and conversion from public to private companies.