Companies (Amendment) Bill, 2014





Companies (Amendment) Bill, 2014

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today approved the introduction of the Companies (Amendment) Bill, 2014 in Parliament to make certain amendments in the Companies Act, 2013.
The Companies Act, 2013 (Act) was notified on 29.8.2013. Out of 470 sections in the Act, 283 sections and 22 sets of Rules corresponding to such sections have so far been brought into force. In order to address some issues raised by stakeholders such as Chartered Accountants and professionals, following amendments in the Act have been proposed:

1. Omitting requirement for minimum paid up share capital, and consequential changes. (For ease of doing business)
2. Making common seal optional, and consequential changes for authorization for execution of documents. (For ease of doing business)
3. Prescribing specific punishment for deposits accepted under the new Act. This was left out in the Act inadvertently. (To remove an omission)
4. Prohibiting public inspection of Board resolutions filed in the Registry. (To meet corporate demand)
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. (To meet corporate demand)
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. (Demand of auditors)
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. (Align with SEBI policy and increase ease of doing business)
10. Replacing ‘special resolution’ with ‘ordinary resolution’ for approval of related party transactions by non-related shareholders. (Meet problems faced by large stakeholders who are related parties)
11. Exempt related party transactions between holding companies and wholly owned subsidiaries from the requirement of approval of non-related shareholders. (corporate demand)
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. (Removal of an inadvertent error)
14. Special Courts to try only offences carrying imprisonment of two years or more. (To let magistrate try minor violations).
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Functioning oF IICA

The Indian Institute of Corporate Affairs (IICA) has become fully functional. There are no plans at present to open its centers across the country. The IICA has been established as a ‘think tank’, action research, service delivery and capacity-building institute to serve as a one-stop-shop providing a platform for value-adding partnerships between government, corporate entities and other stakeholders. Since its establishment as a Society in September, 2008, the Institute has taken many steps to fulfill its mandate, viz. (i) Its five Schools and four Centres have become operational. (ii) Indian Corporate Law Service Academy has become functional and is imparting training to officers of the Indian Corporate Law Service since 2010. (iii) The Institute has emerged as an important Institute for conducting various courses, seminars, workshops etc. on issues of relevance to the corporate sector such as corporate social responsibility, corporate governance, role of company directors, independent directors, competition issues etc. Officials and other stakeholders, both in the private as well as public sector, banks, investors, etc. have benefited from these programmes. (iv) The Institute has carried out research and produced many publications on relevant issues.
IICA has signed four Memorandums of Understanding (MOUs) with foreign institutions namely, George Washington University Law School, USA; German Agency for International Cooperation; Institute of Directors, UK and International Finance Corporation, USA. The IICA has also signed 27 MOUs with reputed domestic institutions including the National Law School of India University, Bangalore, The Energy and Resources Institute, New Delhi, Tata Institute of Social Sciences, Mumbai, Indian Institute of Management, Raipur, Bombay Stock Exchange, etc. These MOUs are meant to furthering the aims and objectives of the IICA to achieve its role as a holistic think-tank, capacity building, service delivery and training Institute by deriving advantages of synergies from partner institutions.
The IICA project was taken up as a Plan scheme under the 11th Five Year Plan (2007-08 to 2011-12) with a budgetary allocation of Rs. 211 crore. It has been allocated a sum of Rs. 110 crore in the 12th Five Year Plan (2012-13 to 2016-17).
This was stated by Shri Arun Jaitley, Minister of Corporate Affair in written reply to a question in the Rajya Sabha today.
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CSR Performance of Companies

The Corporate Social Responsibility (CSR) provisions of the Companies Act, 2013 and Rules made thereunder have come into force from 01.04.2014. This is the first year of implementation of CSR by companies under the Act. The performance of companies in this regard can be assessed only after the Statutory Annual Returns on CSR are filed by the companies, which are due after September, 2015.
Being the first year of implementation of CSR under the legislation, it would be premature to comment on the adequacy and effectiveness of the present policy. The Ministry of Corporate Affairs have, however, issued necessary clarifications from time to time to facilitate implementation of CSR by companies.
This was stated by Shri Arun Jaitley, Minister of Corporate Affair in written reply to a question in the Rajya Sabha today.
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Investigation of Corporate Frauds
There is already a separate agency, the Serious Fraud Investigation Office (SFIO) to investigate corporate frauds.  It was set up through a Resolution dated 02.07.2003 to investigate corporate frauds of serious and complex nature.
The number of Companies investigated by SFIO during the last three years and current year:
Year
No. of Companies
2011-12
20
2012-13
22
2013-14
22
2014-2015 (Till 15.11.2014)
17

Prosecutions are in progress in the appropriate Courts of Low.
           Government has taken a number of measures to curb and prevent corporate frauds, including; ‘Fraud’ as a substantive offence has been introduced in the Companies Act, 2013, Statutory status to the Serious Fraud Investigation Office has been granted under the said Act, Stricter norms of Corporate Governance and their implementation under the Companies Act, 2013, Increasing application of technology for early detection of frauds through data analysis, surveillance and usage of forensic tools, etc.
            This was stated by Shri Arun Jaitley, Minister of Corporate Affair in written reply to a question in the Rajya Sabha today.

Companies (Amendment) Bill, 2014 Companies (Amendment) Bill, 2014 Reviewed by Ajit Kumar on 7:10 AM Rating: 5

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