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|December 15, 1999||
Cabinet agrees to amend Companies, Patents, Essentials Acts
The Union Cabinet on Wednesday approved the proposal to introduce a legislation to bring in important changes in the Companies Act, 1956 to provide good corporate governance and protection for investors.
The proposed amended bill will be introduced in the current session of Parliament.
The amendment proposed to delete the concept of deemed public companies and make it mandatory for the companies to inform the Company Law Board about the failure to repay deposits.
The other major changes in the Act are increasing the minimum paid-up capital requirement to Rs 500,000 from Rs 100,000 for a public limited company as well as companies to inform the CLB within 60 days, if the company fails to make repayment of deposits maturity to small deposit holders.
The other amendments include supervision of listed companies by the Securities and Exchange Board of India, directors to furnish responsibility statement to set up audit committes, to introduce 'secretarial compliance certificate' to abolish concept of 'public trustee', offer of securities by a company to more than 50 persons to be deemed as public issue, to allow 'postal ballot' for certain decisions, to authorise the regional director to allow change in registered office of a company from jurisdiction of one registrar of companies to another within the same state, to allow appointment of auditors by the Comproller and Auditor General directly.
The Companies Act, 1956 was enacted by repealing the Companies Act, 1913. The Act has been amended as many as 18 times since 1956 to keep its provisions in tune with general economic environment and policies of the government.
The last amendment to the Act was made in October 1998 by an ordinance which was replaced by an Amendment Act in 1999.
The object of company legislation is to provide effective protection to investors and public at large and at the same time, to ensure that management employs its resources and energies in the pursuit of the company's objectives within the national economic agenda.
The Cabinet also approved the introduction of a bill to amend the Patents Act, 1970.
It is proposed to amend the Patents Act, 1970 to comply with India's international obligations contained in the Trade Related Intellectual Property Rights Agreement of the World Trade Organisation agreement, to incorporate measures for protection of public and national interest, bio-diversity, traditional knowledge and national security.
It is also proposed to simplify and rationalise the procedures. The modernised law is expected to fulfil international obligations, provide activities and a user-friendly system for protection of inventions in India, official sources said in New Delhi.
The proposal is for making amendments to the Patents Act, 1970 primarily in the context of India's time-bound international obligations under the agreement on TRIPs.
The TRIPs Agreement is part of the agreement establishing the WTO which India has ratified and which came into force from January 1, 1995.
The TRIPs Agreement lays down minimum standards for protection and enforcement of Intellectual Property Rights in member countries and requires them to align their laws and regulations on intellectual property in conformity with their obligations within the time-frame stipulated in the agreement, sources said.
The Union Cabinet has also approved the proposal to attend the Essential Commodities Act, 1955 and to introduce a revised Essential Commodities (Amendment) Bill 1999 in the current session of Parliament.
The amendments proposed to be made in the Essential Commodities Act, 1955 are intended to make the Act more effective and stringent. These amendments not only provide retention, on a permanent basis, of some special provisions contained in the erstwhile Essential Commodities (Special Provisions) Act, 1981 but also aim at reducing harassment to traders.
These amendments are considered necessary for dealing with persons indulging in hoarding and black-marketing and profiteering in essential commodities, official sources said.
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