Government in its effort to address difficulties faced by stakeholders and to improve the ease of doing business in the country, has introduced a bill in the Lok Sabha to further amend the Companies Act. Earlier, a government-appointed panel chaired by Corporate Affairs Secretary had suggested nearly 100 amendments to the new Companies Act to make it easier to do business in India. This is the second time that the current government would be amending the Companies Act, 2013 which was passed during the previous UPA regime.
The bill seeks to simplify private placement process, remove restrictions on layers of subsidiaries and investment companies, amend CSR provisions to bring greater clarity and exempt certain class of foreign entities from the compliance regime under the Act. The bill also proposes to allow unrestricted object clause in the Memorandum of Association dispensing with 'detailed listing of objects, self-declarations to replace affidavits from subscribers to memorandum and first directors' and is looking to omit provisions relating to forward dealing and insider trading from the Act.
Other recommendations proposed in the Bill include introduction of test of materiality for pecuniary interest for testing independence of independent directors, removal of requirement for annual ratification of appointment or continuance of auditor, align prescription for companies to have audit committee and nomination and remuneration committee with that of independent directors.
Presenting the Union Budget for 2016-17, Jaitley had said the proposed bill to amend the Companies Act 2013 will remove the difficulties and impediments to ease of doing business. He had added that the Bill would also improve the enabling environment for start-ups and the registration of companies will also be done in one day.
