The Companies Act which is considered to be one of the most important legal reforms in India, aims to bring Indian Company Law in par with global standards, by focusing on governance and ease of doing business in India. The new Act mostly treats a private limited company on par with a public limited company, the differences between the two being almost negligible. In spite of many circulars, there are many grey areas that require immediate attention by the Ministry – especially why small and mid-sized private limited companies are required to comply with the provisions of the Act as if they are large corporations. Questions like these have been discussed threadbare by various stakeholders in various professional fora. However, even then there was lack of clarity, which led to numerous representations being made to the Ministry by the corporations, stakeholders and professional bodies.
On February 01, 2016 the Committee had submitted a detailed report to Jaitley, suggesting amendments in certain definitions, sections, sub-section and the rules made thereunder. Following are some key amendments as suggested by the Committee:
a.Section 2(49) the definition on ‘interested director’ to be omitted.
b.Bringing in more clarity in the definition of ‘holding company’, by including ‘body corporate’ in its definition.
c.Time period for a Company to have its registered office-after incorporation, and notice of every change of the situation of registered office-to the Registrar, be increased to 30 days.
d.An employee, duly authorised by the Board of Directors can authenticate documents, proceedings and contracts.
e.Separate Annual Return format for small companies and OPC’s, with lesser detail and omission of requirement of attaching extract of the Annual Return to the Board’s Report.
f.Allowing unlisted companies to convene Annual General Meeting at any place in India, subject to approval of 100% shareholders.
g.Provision with regard to ratification of appointment of statutory auditors by the members at every annual general meeting to be omitted.
h.Condition of minimum net worth/turnover/net profit for compliance of CSR provision should be considered for the ‘immediate financial year’.
i.For resident director, the period of 182 days shall apply during the financial year.
j.Directorship in a dormant company to be excluded for reckoning the limit of directorships.
k.Resigning director to be given an option for filing his resignation to the Registrar, instead of making it mandatory.
Considering the recommendations and the concept of ‘ease of doing business in India’, the Bill has been introduced in Lok Sabha. There are high expectations on the consideration and approval of the Bill. It is a summarization of an article by Anup Vijay Kulkarni.
For more information, visit http://www.businesstoday.in/opinion/columns/a-focus-towards-ease-of-doing-business-in-india/story/233289.html