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The Rajya Sabha today passed Companies Bill 2012. Business Standard brings you some key facts.
Why do we need a new company law?
The Companies Act, 1956, though amended 25 times, not in sync with the new economic and corporate realities. Hence, the new law.
How long has it taken to change the law?
Four years. It was first introduced as Companies bill 2009 in Lok Sabha on August 3, 2009.
What is the course the latest version of the bill took?
Last August, Parliamentary Standing Committee on Finance submitted its second report. Lok Sabha passed in December.
What are the key changes?
Rewritten extensively; new provisions for investor protection, better corporate governance and corporate social responsibility. New terms defined.
What are the new corporate terms defined in the bill?
The Bill prescribes 33 new definitions including that of CEO, CFO etc
What are the investor protection measures?
Class action suit, better disclosure in financial statements and disclosure of interests of directors etc. Streamlined procedures relating to disclosure of transactions with parties related to directors, promoters etc.
What are the anti-fraud measures?
It provides for prohibition on forward dealings in securities of company by key managerial personnel, Insider trading rules and restriction on non-cash transactions involving directors.
What are the business-friendly measures?
Single person company, Provision for women directors; Cap on number of persons in a private company raised to 200. E-voting recognized.
What are key concerns?
Numerous provisions contain the clause “as may be prescribed,” which companies fear allows too much discretion for the ministry, which makes the rules
What happens now?
The bill goes for presidential assent. The draft rules on the companies act will then be made public and the act comes into effect with notification by Ministry of Corporate Affairs.
