The government is moving to amend the Companies Act, targeting a legislative push in the winter session of Parliament to make the law more business- and digital-friendly, two people aware of the discussions said.
Likely changes include a key proposal to speed up certain mergers, facilitate electronic document serving and e-adjudication of offences, and enable administrative restoration of companies struck off from the register without the involvement of tribunals, according to one of the sources. The measures aim to help Indian companies turn globally competitive and elevate the country’s ranking in future editions of the World Bank’s Business-Ready index.
One of the proposals is to rework the shareholder voting parameters to enable faster clearance for mergers among start-ups, unlisted companies, and a corporate parent and its wholly-owned subsidiaries. The idea is to ease the current requirement of 90% shareholder approval prescribed under Section 233 of the Companies Act.
Another proposal aims to ease the requirement of physical documents. Currently, the law allows serving documents to the government or shareholders in physical or electronic mode, but if a shareholder requests a physical copy, the company must arrange for it for a fee. The amendment aims to make it sufficient for certain classes of companies to serve documents only in electronic format.
The changes may also strengthen the powers of the National Financial Reporting Authority, especially in acting against auditors for breaches other than ‘professional or other misconduct’, such as failing to file annual returns, the second source added.
However, the government has yet to finalize the proposals for allowing partnership firms to offer multiple services, including legal, secretarial, accounting, auditing, and actuarial services under one roof, as the feedback received from public consultation is still under examination. An expert committee will look into this feedback to determine the best course of action.
