Skip to main content

Rajya Sabha passes Compnaies Bill,2017

Rajya Sabha passes Compnaies Bill,2017
The Companies Amendment Bill seeks to strengthen corporate governance, initiate action against defaulting firms and improve ease of doing business.
The Companies (Amendment) Bill, 2017 which seeks to bring about major changes in the Companies Act, 2013, was passed by the Rajya Sabha on Tuesday by a voice vote.The bill, which was adopted by the Lok Sabha in July, will now have to receive the assent of the President to become law. The amendment seeks to strengthen corporate governance standards, initiate strict action against defaulting companies and help improve ease of doing business in the country. The Companies Act, 2013 has already been amended once under the current government.
It was passed after much debate in the winter session of the Parliament as members raised concerns about independent directors being allowed up to 10% pecuniary interest in a company.Explaining the changes one could expect, Ankit Singhi, partner at consulting firm Corporate Professionals, said, “The much awaited Companies (Amendment) Bill, 2017 has finally seen the light of the day
The major changes 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; and making offence for contravention of provisions relating to deposits as non-compoundable.”
Singhi added that the bill, while rationalizing and simplifying certain provisions, also provides for stringent penalties in case of non-filing of balance sheet and annual return every year, which will act as deterrent to shell companies. “This would facilitate ease of doing business, and result in harmonization with Sebi, RBI (Reserve Bank iof India) and rectify certain omissions and in consistencies in the existing Act.”
Replying to issues raised by the members during the discussion, minister of state for corporate affairs P.P. Chaudhary said the amendment would ensure better corporate governance and improve the ease of doing business in the country.
Under the Act, certain classes of profitable companies are required to shell out at least 2% of their three-year annual average net profit towards corporate social responsibility (CSR) activities. In case of non-expenditure, such entities are required to provide reasons for it to the ministry.
R. Ramakrishna of the Bharatiya Janata Party supported passing of the bill and said there was no provision of carrying forward the CSR funds and companies should be given more time to use these funds. He added that the upper limit of 300 days for filing returns under the Act led to non-compliance and hence, changes have been made in the law to improve timely filings
This was opposed by former finance minister P. Chidambaram, who said a company should not give loans to the director or to those of interest to a director.The Standing Committee on Finance had examined the bill and submitted its report on 7 December 2016. In April, the government circulated some amendments to the bill.

The Mint, New Delhi, 20th December 2017

Comments

Popular posts from this blog

RBI minutes show MPC members flagged upside risks to inflation

RBI minutes show MPC members flagged upside risks to inflation Concerns about economic growth and easing inflation prompted five of the six monetary policy committee (MPC) members to call for a cut in the repo rate, but most warned that prices could start accelerating, show the minutes of the panel’s last meeting, released on Wednesday. The comments reflected a tone of caution and flagged upside risks to inflation from farm loan waivers, rise in food prices, especially vegetables, price revisions withheld ahead of the goods and services tax, implementation of house rent allowance under the 7th pay commission and fading of favourable base effect, among others. On 2 August, the panel chose to cut the repurchase rate—the rate at which the central bank infuses liquidity in the banking system—by 25 basis points to 6%. One basis point is one-hundredth of a percentage point. Pami Dua, professor at the Delhi School of Economics, wrote that her analysis showed “a fading economic growth outlook, as …

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

Differential Tax Levy under GST: Food Firms May De-Register Trademarks

Differential Tax Levy under GST:Food Firms May De-Register Trademarks The government’s decision to charge an enhanced tax rate on trademark food brands is leading several rice, wheat and cereal manufacturers to consider de-registering their product trademarks. Irked by the June 28 central government notification fixing a 5 per cent goods and services tax (GST) rate on food items packaged in unit containers and bearing registered brand names, the industry has made several representations to the government to reconsider the differential tax levy, which these players say is creating an unlevel playing field within these highly-competitive and low-margin industries. Sources say that the move has affected the packaged rice industry the hardest and allowed the un-registered market leaders, India Gate and Daawat, to gain advantage as compared to other registered brands such as Kohinoor and Lal Qilla. Smaller players are even more worried with this enhanced rate of tax (against the otherwise …