Skip to main content

Govt introduces bill to ease rules for India Inc

By
Will Amend Cos Act To Allow Multi-Layer Investment Entities, Hike Penalty On Auditors
Finance minister Arun Jaitley on Wednesday proposed fresh amendments to the Companies Act to do away with the restriction of routing funds through only two layers of investment companies as well as seeking government approval for managerial remuneration.
The amendments moved in the Lok Sabha have also sought to increase penalty for auditors by linking certain fines to the size of the offence and eased rules for private placement of shares. In general, the tone of the amendments -the second since the law was enacted towards the end of UPA rule in 2013 -is to make life simpler for India Inc -be it in providing loans to directors, calling board meetings or restrictions on appointment of an auditor of a company that has links with its “relatives“.
The corporate sector had cited the new Companies Act, which replaced the 1956 law, as an example of how it was tough to do business in the country , which prompted the Narendra Modi government to order a review. The first set of changes were done through a series of clarifications, which were then followed by one round of amendments.The current set of amendments followed extensive consultations by a committee under corporate affairs secretary Tapan Ray.
Based on the committee's recommendations, for the first time, a test of “materiality“ for determining if pecuniary relationships could impact the independence of an individual as an independent director has been proposed.So, anyone whose relative owns interest up to Rs 50 lakh or less than 2%, has loans above a prescribed limit, or has pecuniary relationship with a company which is over 2% of the turnover, will not be eligible to be appointed independent director.
Similarly , in case of restriction on number of layers on investment companies, the panel had suggested that the ceiling imposed by the law could become “too obtrusive and impractical“ although the provision had been imposed after the Satyam scam and several other instances of companies resorting to multi-layering to hide routing of funds. The bill has proposed to do away with that provision.
In addition, there are several areas where clarity has been provided. For instance in case of an associate company , the bill has proposed to define “significant influence“ to mean control of at least 20% of the voting rights or control of participation in business decisions under an agreement.Similarly , joint ventures have been defined in the bill.
Several provisions related to providing clarity have been introduced and more changes are proposed in the rules in the coming months.
Times of India, New Delhi, 17th March 2016

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more