EDITORIAL DISCUSSION – 17thJuly, 2018
2. Overdue correction– THE HINDU– 17th JULY, 2018
NEWS REPORT
1. Centre announced the Constitution of a Committee to revisit several provisions of the Companies Act, 2013 that impose stiff penalties as well as prison terms for Directors and key management personnel.
2. Ten-member Committee appointed by the Corporate Affairs Ministry is tasked with checking, if certain offences can be “decriminalized”.
3. The Panel includes top banker UdayKotak, it was given 30 days to work out, whether some of the violations that can attract imprisonment can be punished with monetary fines.
The Committee, chaired by Corporate Affairs Secretary InjetiSrinivas, would submit its report in 30 days to the Government.
MORE ON THIS COMMITTEE
1. For example, a clerical failure by directors to make adequate disclosures about their interests can attract imprisonment.
2. The Committee will examine the offences punishable with a fine or imprisonment may be re-categorised as “Acts” that attract civil liabilities.
3. It is also with a view to look at broad contours for an adjudicatory mechanism that allows penalties for minor violations, in automated manner.
The law at present is so tough that even a spelling mistake or typographical error could be construed as fraud and lead to harsh strictures.
WHY THE GOVERNMENT KEPT SUCH HARSH PENALTIES AND PRISON TERMS IN 2013 LAW?
1. At that time, anti-corruption discourse was at high-pitch. Several cases of Crony Capitalism came to light at that time. Massive corporate frauds were reported, example is Satyam Computer Services.
2. The credibility of corporate India’s books and governance standards were also questioned at that time.
Under those circumstances, the previous Government brought stringent punishments.
EASE OF DOING BUSINESS…THE TOP MOST PRIORITY
1. The Government’s priority is to revive the economy.
2. Industry heads red-flagged the impact of such stringent provisions on the ease of doing business and investor sentiment.
3. Trust deficit between industry and Government, because of stray incidents of corporate malfeasance should not inhibit normal business operations.
4. The Government is finally moving purposefully on this. One more reason is private sector investment is yet to pick up.
It appears there is a need for changes, when one looks at the less regulatory environment.
2. Overdue correction– THE HINDU– 17th JULY, 2018
NEWS REPORT
1. Centre announced the Constitution of a Committee to revisit several provisions of the Companies Act, 2013 that impose stiff penalties as well as prison terms for Directors and key management personnel.
2. Ten-member Committee appointed by the Corporate Affairs Ministry is tasked with checking, if certain offences can be “decriminalized”.
3. The Panel includes top banker UdayKotak, it was given 30 days to work out, whether some of the violations that can attract imprisonment can be punished with monetary fines.
The Committee, chaired by Corporate Affairs Secretary InjetiSrinivas, would submit its report in 30 days to the Government.
MORE ON THIS COMMITTEE
1. For example, a clerical failure by directors to make adequate disclosures about their interests can attract imprisonment.
2. The Committee will examine the offences punishable with a fine or imprisonment may be re-categorised as “Acts” that attract civil liabilities.
3. It is also with a view to look at broad contours for an adjudicatory mechanism that allows penalties for minor violations, in automated manner.
The law at present is so tough that even a spelling mistake or typographical error could be construed as fraud and lead to harsh strictures.
WHY THE GOVERNMENT KEPT SUCH HARSH PENALTIES AND PRISON TERMS IN 2013 LAW?
1. At that time, anti-corruption discourse was at high-pitch. Several cases of Crony Capitalism came to light at that time. Massive corporate frauds were reported, example is Satyam Computer Services.
2. The credibility of corporate India’s books and governance standards were also questioned at that time.
Under those circumstances, the previous Government brought stringent punishments.
EASE OF DOING BUSINESS…THE TOP MOST PRIORITY
1. The Government’s priority is to revive the economy.
2. Industry heads red-flagged the impact of such stringent provisions on the ease of doing business and investor sentiment.
3. Trust deficit between industry and Government, because of stray incidents of corporate malfeasance should not inhibit normal business operations.
4. The Government is finally moving purposefully on this. One more reason is private sector investment is yet to pick up.
It appears there is a need for changes, when one looks at the less regulatory environment.
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