The government of India is set to lower penalties under the Companies Act while offering concessions to startups, smaller entities and farmer producer companies. Centre constituted Company Law Committee to introduce amendments in the Companies Act. The changes are a part of the amendments that have been finalized by the Company Law Committee.
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There will be respite for loss-making companies, including relaxation in compensation and other steps to enable these entities to hire non-executive or independent directors. This move will also benefit startups as several of them are loss-making and often find it tough to comply with some of the provisions of the Companies Act.
One of the key themes is to lower penalties to incentivise companies to come into the legal fold. Sources told TOI that the idea is to link penalty to gravity of default, impact on public interest and size of the company.
