On July 27, 2017, Lok Sabha passed Companies (Amendment) Bill, 2016, a bill to amend the Companies Act, 2013, seeking to strengthen corporate governance standards, initiate strict action against defaulting companies and help improve the ease of doing business in India.
Key Provisions of Companies (Amendment) Bill, 2016:
The bill was moved by Arjun Ram Meghwal, Minister of State for Finance and Corporate Affairs. It was passed with a voice vote, with over 40 amendments.
- The bill went through a committee of experts and thereafter was vetted by the standing committee on finance.
- Threshold for the easy compliance scheme has been raised to Rs 100 crore from Rs 20 crore, making more companies eligible for the simple compliance regime.
- The bill seeks to ease rules for private placement of securities and fix an eight-year limit on reopening of past accounts against no limit in the earlier regime.
- Unlisted companies have been permitted to hold annual general meetings in places other than the registered office as well.
- The bill seeks to harmonise insider trading rules with those of stock market watchdog Securities and Exchange Board of India (SEBI).
- The amendment bill proposes to make incorporation of companies easier by allowing self-declarations instead of affidavits from subscribers to memorandum and first directors.
Opposition’s Reaction on the Companies (Amendment) Bill, 2016:
Congress leader K V Thomas said the bill would dilute many stringent provisions of the Companies Act, 2013.
- Opposition also raised concerns that the government was not doing enough to ensure that companies comply with Corporate Social Responsibility (CSR) provisions, to which Mr. Meghwal responded that ministry has already issued notices to many firms for not complying with CSR provisions under the Companies Act.