Adyasree Prakriti Sivakumar
With the introduction of the new Companies Act and its incorporation with effect from 1st April 2014 has brought much criticism and appreciation from connoisseurs and masses alike. The act which consists of 14 better and new principles and policies was put forth before the cabinet on Tuesday for the purpose of “making it easier for corporates to do business in India” and “to ensure severe punishment for raising illegal deposits from the public” by clearing a slew of changes to this law.
This would be among the first major initiatives by the government to make changes in the country’s regulatory framework to improve its global ranking for ease of doing business, where in India is ranked at a low 142nd position as per the World Bank report.
The following amendments consist of 14 propositions, which have been approved by the Union Cabinet on Tuesday evening, include a provision to ensure that frauds beyond a certain threshold would need to be mandatorily reported by the auditors to the government. A provision had also been included that prescribes specific punishment for deposits accepted under the new Act. This isn’t that strict and enforceable in the present scenario.
In lieu of the above decisions made, certain issues were raised by the corporates themselves to which the government sent their “friend request” by agreeing to relax a number of norms. Adding on, two more incentives were offered wherein resolution passed by the companies’ boards would not subjected to public inspection and a provision is now included for writing off past losses/depreciation before declaring dividend for the year.
This new law put into place has replaced nearly six-decade-old Companies Act, 1956. The Companies (Amendment) Bill 2014, cleared by the Union Cabinet, chaired by Prime Minister Narendra Modi, would now go to Parliament to bring into effect necessary amendments to the existing Act.
The initiative taken by our government is appreciable and commendable and could be a revolution in the corporate sector.