26.1 The Committee noted that the establishment/designation of Special Courts under the Act would result in faster prosecution of defaulting companies. The changes made through the Companies (Amendment) Act, 2015 have also been noted by the Committee. The Committee recommended the early establishment/designation of the Special Courts. It may also be considered whether Special Courts at the subordinate level may also be established, in addition to the Sessions Judge or Additional Sessions Judge.

Offences to be non-cognizable (Section 439)

26.2 Section 439 (2) of the Act provides that “No court shall take cognizance of any offence under this Act which is alleged to have been committed by any company or any officer thereof, except on the complaint in writing of the Registrar, a shareholder of the company, or of a person authorised by the Central Government in that behalf.” The Committee observed that sub-section (2) does not have a provision for complaints to be filed by a person who is a member of a company without any share capital. Therefore, to include such persons within the ambit of Section 439, the words ‘or member’ should be inserted after the term ‘shareholder’ in sub-section 2.

Special Courts

26.3 The amendment in Section 435, through the Companies (Amendment) Act, 2015, empowered the Special Courts to adjudicate offences punishable with imprisonment of two years or more only. The Committee recommended, that a consequential change in Section 441(6) ought to be made to refer to Special Courts, as well as other courts with whose permission the compounding may be allowed.

Special Courts designation urged to speed corporate prosecutions and allow company members to file complaints. Establish and designate Special Courts, including subordinate-level courts, to expedite prosecutions; amend the complaint standing provision to insert 'or member' after 'shareholder' to include members of companies without share capital; and make a consequential amendment to compounding provisions to refer expressly to Special Courts alongside other courts permitted to allow compounding following the narrowing of Special Courts' trial jurisdiction.