The government plans to adopt a transparent and interactive process to finalise a detailed set of rules to be adopted under the new Companies Bill, and will soon seek comments from India Inc and general public in this regard.
The new Companies Bill, which entails sweeping changes in the way the companies operate and are regulated in India, was passed by the Parliament earlier this month and is awaiting President's consent to become a law.
"While we wait for this new bill to be signed into a law, a process has already begun to frame the detailed subordinate rules and the same would be finalised in a very transparent manner and not through a bureaucratic exercise," Corporate Affairs Minister Sachin Pilot said.
"Our aim is to usher in an era of less regulations and more compliance and the new rules would be framed in such a way so that they are easily understood and can be easily complied," Pilot told PTI in an interview.
The new set of regulations would replace a nearly six-decade-old legislation, the Companies Act, 1957, which has been amended at least 25 times and many of its provisions have turned out to be outdated or inadequate.
Among others, the new bill makes it mandatory for companies to spend on social welfare, empowers investors against frauds committed by promoters, encourages companies to have women directors, and seeks to bring in greater transparency in corporate governance matters such as executive salaries and the role of auditors.
The new Bill also provides about three dozen new definitions, including for terms such as frauds, promoters, turnover, related parties (to promoters), small companies, associate companies and employee stock options.
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Besides, it provides for a uniform financial year (April-March) for all companies and proposes strong checks against fraudulent money-collection activities through issuance of various securities.