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Nod for changes to Companies Act
Why is it in the news?
- The Centre proposes to amend the Companies Act again, in a bid to decriminalise a number of offences.
- It also looks to ease corporate social responsibility (CSR) requirements, especially for smaller companies.
More in the news
- The Union Cabinet approved the proposal to amend 65 sections of the companies Act.
- The amendments:
(1) The bill will enable the listing of Indian companies on stock exchanges in foreign jurisdictions.
(2) This is expected to give Indian firms greater access to capital, a broader investor base and better valuations.
(3) For 11 kinds of offences, the provision of imprisonment will be removed, limiting punishment to fines only.
(4) Six offences that had already been decriminalised earlier will see a further reduction in the quantum of penalties.
(5) It will ensure that companies which have an obligation to spend ₹50 lakh per annum or less on Corporate Social Responsibility (CSR) are no longer required to have a CSR committee.
(6) Companies that spend more than the mandatory 2% on CSR in a particular year can carry it forward as credit for fulfilment of CSR obligations for the next few years as well.
- Significance of the Amendments:
(1) The changes are expected to significantly enhance the confidence of Indian corporates in the government’s resolve to provide greater ease of doing business.
(2) It will accord highest respect to honest wealth creators in the country and reduce the burden on the justice system.
Source
The Hindu.