The Companies Bill 2009, which seeks to replace a half-a-century-old Act, will be presented in Parliament in the ongoing Budget session, Finance Minister Pranab Mukherjee said on Monday.
The new Companies Bill, which was tabled in the backdrop of the Rs 14,000 crore (Rs 140 billion) Satyam fraud, promises greater shareholder democracy and stricter corporate governance norms.
"The Companies Bill introduced in Parliament in 2009 has been received by the Parliamentary Standing Committee. The proposed Bill will be introduced in Lok Sabha in current session," Mukherjee said, while unveiling his Budget proposals for 2011-12.
The Bill introduces for the first time in India the concept of class action suits, which would empower investors to sue a company for "oppression and mismanagement" and claim damages.
Also, the Serious Fraud Investigation Office, which played a active role in investigating the accounts bungling at Satyam Computer Services disclosed and perpetrated by founder B Ramalinga Raju in January 2009, will also get statutory existence.
Besides other things, the Bill also proposes to tighten the laws for raising money from the public. There will be a single forum for approval of mergers and acquisitions, whether domestic or with foreign entities.
Also, the procedure for merger of holdings and wholly-owned subsidiaries will be shortened. The Bill also seeks to prohibit insider trading by company directors or key managerial personnel by treating such activities as a criminal offence.
To check the menace of vanishing companies, under the proposed law, every director would be given a unique Director Identification Number that would make their identification and tracking easier.
The bill will also make it mandatory for listed companies to have 33 per cent independent directors and provide for formation of a One Person Company, while empowering the government to have a simpler compliance regime for small companies.
The Companies Bill (2008), which lapsed with the dissolution of the 14th Lok Sabha, was reintroduced in the Lok Sabha in August 2009.
Subsequently, in August 2010 the Parliamentary Standing Committee on Finance gave its report after examining the provisions of the law.
According to the Committee's report, the MCA has accepted suggestions made by the panel in about 500 cases and even suggested revised formulations in about 125 cases.
