The government on Thursday introduced a new Companies Bill, 2008, in the Lok Sabha that makes it easy for a company from the stage of incorporation to winding up by doing away with host of obsolete provisions.
Companies Bill, 2008, once approved by Parliament, will replace the existing Companies Act, which was enacted in 1956. The Bill was introduced by Minister of Corporate Affairs Prem Chand Gupta in the Lower House amid objections raised by CPI (M) member Varkala Radhakrishnan.
Objecting to the introduction of Bill by the minister, Radhakrishnan said that a 250-odd page Bill is almost like an encyclopedia and should have been given to MPs at least two days in advance.
"It (bill) was given to us only this morning. Is this the way legislative business should be conducted by the government?" he questioned.
The bill, according to the statement of objects and reasons, will provide for "basic principles for all aspects of internal governance of corporate entities and a framework for their regulations."
Highlights of the new Companies Bill 2008
The new Companies Bill 2008 introduced in Parliament on Thursday proposes to bring in a single legal framework for regulating internal governance of corporate, from the time of incorporationto liquidation.
The following are the highlights of what the Bill seeks to do:
- Harmonise corp regulation with other sectoral regulators;
- Ensure shareholder democracy with due rights to minority;
- Introduce e-governance in all company processes;
- Ensure liability of Board and senior management;
- Bring new scheme for penalties and punishment for violations;
- Specific framework for M&As of companies;
- One-third directors to be independent in all listed cos; for others government to prescribe number of such directors;
- Key managerial personnel (KMP) to include CEO, CFO and CS;
- Make insider trading a criminal offence;
- Make consolidation of financial statements of subsidiaries;
- with holding companies mandatory;
- Single forum for approval of mergers and acquisitions;
- Framework for fair valuation in cos. for various purposes;
- Administration of Investor Education and Protection Fund through a statutory authority;
- Revised framework for regulating insolvency;
- Have special courts for offences under the Companies Law; and
- Create National Company Law Tribunal for matters like M&A, amalgamation, reduction of capital and winding up.