December 2012 witnessed progress for key reform legislation aimed at changing the business landscape of India. After hanging in limbo for a long time, the lower house of the parliament cleared the revised draft of the Companies Bill, 2011.
Two other reform bills – the Banking Laws (Amendment) Bill, 2011, and the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2011 – recently received the nod of the upper house. The former paves the way for issuance of new bank licences and consolidation in the sector, while the latter is an attempt to strengthen the regulatory framework for recovery of debts.
The changes in the Companies Bill aim at improving corporate governance, increasing transparency, making independent directors more accountable and strengthening regulations for companies and auditing firms. The bill makes it mandatory for profit-making companies to spend on activities relating to corporate social responsibility; allows only two layers of subsidiaries for investment in companies; requires approvals from shareholders and board of directors for appointment of auditors; and provides for class action suits. The bill also gives more statutory powers to the Serious Fraud Investigation Office to better tackle corporate fraud.
You must be a
to read this content, please
Ranjana Roy Gawai, the managing partner at RRG & Associates, was among those involved with the Indian Institute of Corporate Affairs, Ministry of Corporate Affairs, in recommending amendments to the Companies Bill, 2011. Vasudha Sen is a team leader at RRG & Associates.
C-14, Lower Ground Floor
New Delhi – 110048
Tel: +91 11 4056 3742
Fax: +91 11 4100 5046