Govt to set up expert panel on Companies Act next week

Saturday, May 16, 2015,20:18 IST By metrovaartha A A A

New Delhi | After just making a slew of amendments to the ‘complicated’ Companies Act, government will constitute an expert committee next week to suggest further changes to make it easier to do business. There were about 50 odd provisions (in the Companies Act, 2013) which were very hurting…I will be constituting a committee…may be in the course of next week, Finance Minister Arun Jaitley said in an interview.
He said the government might go in for another round of amendments depending on the suggestions received from the committee, which will interact with stakeholders on further easing of rules. The Companies Act, 2013 has more than 450 clauses and several of them had complicated doing of business, he said, adding you are feeling the pinch after its being implemented.
The government earlier this week effected 16 amendments in the Companies Act with a view to streamline procedures and remove some of the provisions with regard to denial of bail for violations of those provisions. He said that there was one provision in this Act, which had similar conditions for bail in a corporate crime as in the now-defunct Prevention of Terrorism Act (POTA). Under POTA, bail was virtually impossible unless the public prosecutor concedes that there is no case or the judge comes to the conclusion that there is no case made, he said.
While POTA was replaced by Unlawful Activities Prevention Act with harsh bail provision dropped, the same was brought in the Companies Act, he said. Bail provision considered too harsh for an anti-terrorism law, word for word, full-stop for full-stop was brought into the Companies Act, he said, adding he got the provision removed from the Act through the recent amendments. Jaitley said, the worst offence in a corporate setup could be extreme fraud like the Satyam scam. There are several other offences where you pay penalty and get out, but you have a bail provision in which you will never get bail.
Jaitley said that because of the complicated and stiff provisions in the Companies Act, many entrepreneurs thought of setting up of Limited Liability Partnership firms for their businesses. Parliament earlier in the week had approved as many as 16 amendments in the Companies Act, which mainly dealt with winding up of companies, board resolutions, bail provisions and utilisation of unclaimed dividends with a few to bring the law in tune with the global standards.
Jaitley had said the amendments were necessitated as there have been complaints from the corporates about the problems ever since the law was enacted in 2013. While piloting the amendment bill in the Rajya Sabha, the Finance Minister had said that 16 amendments were not enough to cover everything.
He had further said a broad-based committee will continue to go into this question for the next few months as to where the shoe pinches…and this may not be the last amendments which we are bringing in. The expert committee would comprise representatives of bodies of company secretaries, chartered accountants, industry chambers and ministry officials.