Frauds worth Rs 10 lakh may become compoundable

Companies’ Law Committee on Monday recomm-ended around 150 changes to the new Companies Act including Esops for promoters working as employees, increasing the limit of sweat equity for start ups and making frauds involving Rs 10 lakh compoundable.

Companies Law Committee was constituted in June 2015 for examining and making recommendations on the issues arising out of implementation of the Companies Act, 2013. The panel has proposed changes in 78 sections of the Companies Act, 2013. Some 50 amendments to the Rules have also been proposed. It suggested the government to rationalise penal provisions with reduced liability for procedural and technical defaults. It said that penal provisions for small companies be reduced.

It has also said that frauds involving less than Rs 10 lakh to be made compoundable offences.

It has recommended that managerial remuneration be approved by shareholders. It suggested that Esops be allowed to promoters working as employees/directors. It said that limit on sweat equity to be raised from 25 per cent of paid up capital to 50 per cent for start-ups.

It has suggested the government to modify definition of associate company and subsidiary company to ensure that ‘equity share capital’ is the basis for deciding holding-subsidiary relationship rather than “both equity and preference share capital”.