Parliament today passed a bill to amend the Companies Act to strengthen corporate governance standards, initiate strict action against defaulting companies and help improve ease of doing business.
The amendments to the companies law provide for stringent penalties in case of non-filing of annual returns which would act as a deterrent against shell entities, according to an expert. Parliament today passed a bill to amend the Companies Act to strengthen corporate governance standards, initiate strict action against defaulting companies and help improve ease of doing business. The Rajya Sabha passed the Companies (Amendment) Bill, 2017 by a voice vote. It was cleared by the Lok Sabha in July this year. “The bill while rationalising and simplifying certain provisions, also provides for stringent penalties in case of non-filing of balance sheet and annual return every year, which will act as deterrent to shell companies. “The changes will facilitate ease of doing business, result in harmonisation with Sebi and RBI and rectify certain omissions and inconsistencies in the existing Act,” Ankit Singhi, Partner at advisory firm Corporate Professionals said in a statement. The bill was introduced in the Lok Sabha in March 2016 and then referred to the Standing Committee on Finance. After taking into consideration the recommendations of the panel, the Cabinet cleared a revised bill in March this year. Already, the Act has been amended once by the present government. Simplification of the private placement process, rationalisation of provisions related to loans to directors and doing away with the requirement of central government approval for managerial remuneration above prescribed limits are among the changes that would be made through the bill.