Companies Bill Passed by the Rajya Sabha

In a significant development, the Companies Bill, 2012 was
passed by the Rajya Sabha (the Upper House of Parliament). The press release of
the Government, which terms the event as “historic”, is available here. The new
law will come into force once it receives the assent of the President. The Bill had already received the approval of the Lok Sabha (the Lower House) in December 2012.
The background to and salient features of the Bill have been
described as follows:
The new Companies Bill, on its enactment,
will allow the country to have a modern legislation for growth and regulation
of corporate sector in India. The existing statute for regulation of companies
in the country, viz. the Companies Act, 1956 had been under consideration for
quite long for comprehensive revision in view of the changing economic and
commercial environment nationally as well as internationally. The new law will
facilitate business-friendly corporate regulation, improve corporate governance
norms, enhance accountability on the part of corporates/ auditors, raise levels
of transparency and protect interests of investors, particularly small
investors.
The salient features of the new
Companies law are: Business friendly corporate Regulation/ pro-business initiatives;
e-Governance Initiatives; Good Corporate Governance and CSR; Enhanced
Disclosure norms; Enhanced accountability of Management; Stricter enforcement;
Audit accountability; Protection for minority shareholders; Investor protection
and activism; Better framework for insolvency regulation; and Institutional
structure.

Once it comes into force, it will usher in a new
regime. It is the first overhaul of company legislation in India in more than
50 years, and comes at least two decades after the proposal for the current
round of reenactment was mooted.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

1 comment

  • We look forward to analytical articles on the Bill on this blog. Most of the other coverage has been simply to highlight the provisions: we would love to see the members of this blog placing the provisions in the conceptual context and carrying out a detailed analysis of how the statutory changes will be seen in the background of existing law and legal concepts.

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