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The Union Cabinet on Wednesday removed one more hassle for companies to start a business. It has cleared amendments in the Companies Act in this regard.
Before a company is registered, it has to go through some steps, the last of which is to obtain a commencement certificate. Basically, the certificate is a kind of declaration by the company concerned that it has completed earlier steps.
The proposed amendment will do away the requirement to present this certificate before starting a business. This certificate is also currently necessary to obtain loans from lenders for the company.
“The proposed amendment will move us a small step closer to fulfilling the Prime Minister’s ‘Make in India’ campaign,” said Yogesh Sharma, Partner, Assurance, Grant Thornton India LLP.
The Cabinet has also cleared the way for the government to rationalise the process for granting exemptions to companies from certain rules. Experts say the government will give itself room to exempt certain classes of companies from any rules under the Companies Act, in a structured way.
“The 2013 Act was designed in such a way that the legislation is more dependent on Rules than the Act itself. The proposal to ensure speedier issue of final notifications should be certainly favorable for all,” said Sharma.
These amendments will now be part of the Companies (Amendment) Bill.
