Overdue Correction: On Revisiting The Companies Act
The Centre has announced the constitution of a committee to revisit several provisions of the Companies Act, 2013 that impose stiff penalties and, in some cases, prison terms as well, for directors and key management personnel. The 2013 law entailed the first massive overhaul of India’s legal regime to govern businesses that had been in place since 1956 and was borne of a long-drawn consultative process. Now, this 10-member committee appointed by the Corporate Affairs Ministry has been tasked with checking if certain offences can be ‘de-criminalized’. The panel, which includes top banker Uday Kotak, has been given 30 days to work out whether some of the violations that can attract imprisonment (such as a clerical failure by directors to make adequate disclosures about their interests) may instead be punished with monetary fines. It will also examine if offences punishable with a fine or imprisonment may be re-categorised as ‘acts’ that attract civil liabilities. Importantly, the committee has also been asked to suggest the broad contours for an adjudicatory mechanism that allows penalties to be levied for minor violations, perhaps in an automated manner, with minimal discretion available to officials. In fact, some of the provisions in the law are so tough that even a spelling mistake or typographical error could be construed as a fraud and lead to harsh strictures. The government hopes such changes in the regulatory regime would allow trial courts to devote greater attention to serious offences rather than get overloaded with cases as zealous officials blindly pursue prosecutions for even minor violations. The decision to build in harsh penalties and prison terms for corporate misdemeanors in the 2013 law was, no doubt, influenced by the high-pitched anti-corruption discourse that prevailed in the country at that moment in time. Apart from several cases of crony capitalism that had come to light during the second UPA government, massive corporate frauds reported at once-revered firms such as the erstwhile Satyam Computer Services had spooked investors and other stakeholders about the credibility of corporate India’s books and governance standards. When the NDA came to power in May 2014, a comprehensive review of the Companies Act was at the top of industry’s wish list as a means to revive the economy. Industry captains had red-flagged the impact of such provisions on the ease of doing business, and investor sentiment in general. A trust deficit between industry and government owing to stray incidents of corporate malfeasance should not inhibit normal business operations, they had argued. Four years down the line, the government is finally moving purposefully on this, a rethink perhaps triggered by the fact that private sector investment is yet to pick up steam and capital still seeks foreign shores to avoid regulatory risks. One hopes this is followed up on swiftly, before the ruling party slips into election mode.
WORDS AND MEANINGS:-
1) Stiff
Meaning: Severe or strong.
Example: “they face stiff fines and a possible jail sentence”
Synonyms: Harsh, Severe
Antonyms: Lenient, Mild
2) Entailed
Meaning: Involve (something) as a necessary or inevitable part or consequence.
Example: “a situation which entails considerable risks”
Synonyms: Require, Demand
3) Overhaul
Meaning: A thorough examination of machinery or a system, with repairs or changes made if necessary.
Example: “a major overhaul of environmental policies”
4) Consultative
Meaning: Intended to give professional advice or recommendations.
Example: “a process of consultative review”
5) Tasked
Meaning: Assign a task to.
Example: “NATO troops are tasked with separating the warring parties”
6) Contours
Meaning: An outline representing or bounding the shape or form of something.
Example: “she traced the contours of his face with her finger”
Synonyms: Outline, Form
7) Adjudicatory (Adjudicate)
Meaning: Make a formal judgment on a disputed matter.
Example: “the Committee adjudicates on all betting disputes”
8) Discretion
Meaning: The freedom to decide what should be done in a particular situation.
Example: “local authorities should use their discretion in setting the charges”
Synonyms: Choice, Option
9) Construed
Meaning: Interpret (a word or action) in a particular way.
Example: “his words could hardly be construed as an apology”
Synonyms: Interpret, Understand
10) Strictures
Meaning: A statement of severe criticism or disapproval.
Example: The strictures of the United Nations have failed to have any effect on the warring factions.
Synonyms: Disapprove, Criticize
11) Zealous
Meaning: Having or showing zeal.
Example: “the council was extremely zealous in the application of the regulations”
Synonyms: Fervent, Ardent
Antonyms: Apathetic, Indifferent
12) Misdemeanours
Meaning: a minor wrongdoing.
Example: “the player can expect a suspension for his latest misdemeanour”
Synonyms: Wrongdoing, Crime
13) Influenced
Meaning: Have an influence on.
Example: “feminist ideas have influenced the law-makers”
Synonyms: Affect, Determine
14) Prevailed
Meaning: Be widespread or current in a particular area or at a particular time.
Example: “a friendly atmosphere prevailed among the crowds”
Synonyms: Exist, Obtain
15) Crony capitalism
Meaning: An economic system characterized by close, mutually advantageous relationships between business leaders and government officials.
Example: “allegations of crony capitalism have plagued the government”
16) Revered
Meaning: Feel deep respect or admiration for (something).
Example: “Cézanne’s still life was revered by his contemporaries”
Synonyms: Respect, Admire
Antonyms: Despise
17) Erstwhile
Meaning: Former.
Example: “the erstwhile president of the company”
Synonyms: Former, Old
Antonyms: Present, Future
18) Spooked
Meaning: Frighten; unnerve.
Example: “they spooked a couple of grizzly bears”
19) Revive
Meaning: Give new strength or energy to.
Example: “the cool, refreshing water revived us all”
Synonyms: Reinvigorate, Revitalize
Antonyms: Torpefy
20) Stray
Meaning: To start thinking or talking about a different subject from the one you should be giving attention to.
Example: I think we’ve strayed too far from our original plan.
21) Malfeasance
Meaning: An example of dishonest and illegal behaviour, especially by a person in authority.
Example: Several cases of malpractice and malfeasance in the financial world are currently being investigated.
Synonyms: Dishonest
22) Triggered
Meaning: Cause (an event or situation) to happen or exist.
Example: “an allergy can be triggered by stress or overwork”
Synonyms: Precipitate, Prompt
23) Pick up steam
Meaning: To start working or producing at a faster rate or more effectively.
Example: After a slow start, the project began to pick up steam.
