Friday, October 24, 2008

Companies Bill Introduced In Parliament - Oct 24, 2008

The government on Oct 23 introduced the Companies Bill 2008 in Parliament that will replace a 52- year-old legislation, with new provisions that foster speedy mergers and acquisitions with lesser state control.The Bill seeks to sweep away over 600 provisions in the existing. law and bring in a smaller list of 426 (rpt) 426 that provides for greater shareholder democracy and fair valuations in companies.

The Companies Bill, 2008, introduced by Minister of Corporate Affairs Prem Chand Gupta in Lok Sabha, would replace the existing Companies Act, 1956, once it is passed by Parliament.The bill, according to the statement of objects and reasons, provides for formation of One-Person Company, while empowering government to provide a simpler compliance regime for small companies.

It said that companies would not be allowed to raise deposits from the public except on the basis of permission obtained by them through other legislations.The bill also prohibits insider trading by company directors or key managerial personnel and declares such activities as offence with criminal liability.

It retains the concept of producer companies, while providing a more stringent regime for companies with charitable object to check misuse.The proposed legislation also articulates shareholders democracy with protection of rights of minority shareholders, responsible self-regulation with adequate disclosure and accountability. Reduction of government control over internal corporate processes.

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