New Delhi, Sept 5 (KNN) With regard to offences under Companies Act, an expert panel set up by government has recommended simplified penalties for minor offences related to technical defaults and corporate governance.

At the same times, it has decided to treat contraventions, such as non-disclosure of by a director regarding an interest in a contract or an agreement, as a grave offence where the current mechanism of penalty and prosecution by courts will continue.

Undertaking detailed analysis of all penal provisions which were broken down into 8 categories based on nature of offences, Committee recommended that “existing rigor 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”, said Ministry of Corporate Affairs in a release.

The panel recommended that 16 technical and corporate governance offences be moved out of the ambit of courts, where over 40,000 were pending at the end of June, it has proposed that only fine should be levied in 12 offences.

 In another four, the panel has suggested that it could be a fine or imprisonment, or both. 

To review the existing framework dealing with offences under the Companies Act 2013 and related matters, the committee headed by corporate affairs secretary Injeti Srinivas submitted its report to Finance Minister Arun Jaitley last week making some recommendations amending the law to incorporate some of the proposed changes.

A delay or failure to file annual returns with the registrar of companies can come under the second category, while a violation related to certain resolutions or a report by a public-listed company on an annual general meeting should only attract a fine, the panel suggested.

Similarly, a delay or a failure in filing a notice for alteration of share capital or attachment of statement of special business in a notice calling for an AGM will only face a fine.

 At the same time, the committee has decided against tinkering with penalties for serious offences.

The Committee on review of penal provisions of Company Act 2013 included Uday Kotak, Managing Director, Kotak Mahindra Bank, Shardul S Shroff, Executive Chairman Shardul Amarchand Mangaldas & Co. among others.