Govt To Set Up Faceless Adjudication For Settling Offenses Under Company Law

Govt To Set Up Faceless Adjudication For Settling Offenses Under Company Law
Govt To Set Up Faceless Adjudication For Settling Offenses Under Company Law

The ministry of corporate (MCA) affairs will set up faceless adjudication for compoundable offenses under the company act. The move will take them a step closer in their attempt to eliminate bureaucratic bottlenecks and encourage corporate compliance.

MCA recommended the move to create a transparent and technology-driven adjudication mechanism that will improve transparency in the adjudication process.

The adjudication of company law breaches remotely will minimize the physical appearance, and reduce the load on the Special Courts/Tribunals. Proceedings will be conducted through the MCA website.

Adjudication of company law breaches under the Company Act, 2013, requires a defaulting company representative to appear before the adjudicating officer during the proceedings. The latest amendment, however, re-categorized 16 offenses out of 81.

These are to be classified as compoundable offenses and will be subjected to an in-house adjudication officer who will impose a penalty, instead of going through the usual bureaucratic bottleneck.

E-notices will be served to the defaulters. In situations where no reply was received to the E-notice within a time frame, a physical notice will be served. This will also help in promoting social distancing as necessitated by the COVID-19 pandemic.

MCA also seeks to amend the Company Bill 2020 in an attempt to improve the ease of doing business. The amendment will see to the ratification of 23 offenses. This Bill – which is yet to be passed – was introduced by the Lok Sabha in the recently concluded budget session.

MCA’s proposed faceless adjudication will be a relief to the National Company Law Tribunal (NCLT). It will ensure speedy adjudication of serious cases, which will also allow NCLT Benches to focus on important bankruptcy cases.

The MCA through the finance and corporate affairs minister has made an effort to help businesses deal with the effect of the COVID-19 pandemic. Relief Measures was announced by finance and corporate affairs minister Nirmala Sitharaman regarding compliances. No fee or penalty shall be charged for delay in payments.



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