Proposed Change to Companies Act 2013

The BJP led NDA Government has initiated to change the Companies Act 2013 , which came into force from 1^st April 2013 but came  under  criticism due to not being pro corporate & Business as claimed by few

After having several round of meetings with stake holders Government has approved the proposed changes in its Cabinet meeting on              2^nd December 2014

The changes proposed are being termed as Pro Business and to promote ease of doing Business in India . To improve India Global ranking from present 146^th to below 50 in next few years.

The changes will be placed in parliament as Companies Amendment Act 2014   

1.   No minimum paid up share capital for Companies  

2.    Making common seal optional for authorization for execution of documents.  

3.   Prescribing specific punishment for deposits accepted under the new Act 2013 . This was left out in the Act inadvertently.  

4.    Prohibiting public inspection of Board resolutions filed in the Registry.  

5.   Including provision for writing off past losses/depreciation before declaring dividend for the year. This was missed in the Act but included in the Rules.  

6.   Rectifying the requirement of transferring equity shares for which unclaimed/unpaid dividend has been transferred to the IEPF even though subsequent dividend(s) has been claimed

 

7.   Enabling provisions to prescribe thresholds beyond which fraud shall be reported to the Central Government (below the threshold, it will be reported to the Audit Committee). Disclosures for the latter category also to be made in the Board's Report.

8.   Exemption u/s 185 (Loans to Directors) provided for loans to wholly owned subsidiaries and guarantees/securities on loans taken from banks by subsidiaries. (This was provided under the Rules but being included in the Act as a matter of abundant caution).  

9.    Empowering Audit Committee to give omnibus approvals for related party transactions on annual basis. 

10.       Replacing 'special resolution' with 'ordinary resolution' for approval  of related party transactions by non-related shareholders.

11. Exempt related party transactions between holding companies and wholly owned subsidiaries from the requirement of approval of non-related shareholders.

12. Bail restrictions to apply only for offence relating to fraud u/s 447. (Though earlier provision is mitigated, concession is made to Law Ministry & ED)

13. Winding Up cases to be heard by 2-member Bench instead of a 3-member Bench.

14. Special Courts to try only offences carrying imprisonment of two years or more.