The Companies (Amendment) Bill, 2017 that aims to bring about major changes in the Companies Act, 2013, was passed by the upper house of the Parliament, Rajya Sabha on 19 December 2017 by a voice vote.
The Bill was passed previously by the Lok Sabha in July 2017 during its Monsoon session. It will now have to receive the assent of the President of India to become a law.
The Bill seeks to amend the companies law to strengthen corporate governance standards, initiate strict action against defaulting companies and help improve ease of doing business in the country.
It provides for more than 40 amendments to the Companies Act, 2013, which was passed during the previous UPA regime.
The major changes possibly brought on by the bill’s adoption will include:
• Simplification of the private placement process.
• Rationalization of provisions related to loans to directors.
• Replacing the requirement of approval of the central government for managerial remuneration above prescribed limits by approval through special resolution of shareholders.
• Aligning disclosure requirements in the prospectus with the regulations made by Sebi (Securities and Exchange Board of India).
• Providing for maintenance of register of significant beneficial owners.
• Making offence for contravention of provisions relating to deposits as non-compoundable.
The Bill was introduced in the lower house of the Parliament, the Lok Sabha in March 2016 and then was referred to the Standing Committee on Finance, which examined the bill and submitted its report on 7 December 2016.
After taking into consideration the recommendations of the panel, the Union Cabinet had cleared a revised Bill in March 2017.
The Companies Act, 2013 has already been amended once under the present government.
The passing of the bill would help in simplifying procedures, make compliance easy, and take stringent action against defaulting companies.