In a significant move, the Lok Sabha today passed the Companies (Amendment) Bill 2016 which aims to amend the Companies Act, 2013 in relation to structuring, disclosure and compliance requirements for companies. The Bill was passed through a voice vote after Arjun Ram Meghwal, Minister of State for Finance moved as many as 43 amendments to the original Bill.
The Bill, facilitates greater flexibility in incorporation of companies, simplifies procedure for raising capital and allows independent directors to have pecuniary interest up to 10 per cent in companies.
The Bill removes the limits in the number of intermediary companies through which investments can be made in a company. It also removes the restrictions in the number of layers of subsidiaries a company can have.
The Bill requires a group of persons who exercise beneficial control (above 25%) in a company to disclose such interest.
Under the Act, a separate offer letter should be issued to individuals to whom a private offer of shares has been made. The Bill removes the requirement of such offer letter, but retains the provision related to notifying the Registrar of the return of allotment.
The Act permits the appointment of members at the level of Joint Secretary to the quasi- judicial tribunal. Under the Bill, a technical member must be at least of the level of an Additional Secretary.
Replying to the discussions on the Bill, Meghwal said that the changes to the Company Law would go a long way in improving the ease of doing business in India. It would also help India move higher in the rankings in the Ease of Doing Business index, he added.
Read the full text of the Bill below.
