Sweeping changes in company laws recommended

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PIC CA

The corporate law framework could see a significant change if a government-appointed panel’s recommendations are implemented this year.
Sweeping changes with as many as 100 proposed amendments to the existing company law enacted by the UPA Government in 2013 have been suggested by the 10-member Companies Law Committee, which was set up in June 2015. Some of the significant suggestions include doing away with the need for government approval for managerial remuneration, specifying a pecuniary relationship threshold for directors (violation of independence) and removing the cap of layering of subsidiaries.
The recommendations, submitted on Monday, cover significant areas of the Act including definitions, raising of capital, accounts and audit, corporate governance, managerial remuneration, companies incorporated outside India, and offences/penalties.
Broadly, the committee’s recommendations seek to tackle three types of issues — addressing the transitional-cum-implementation problems; removal of inconsistencies between the new company law, SEBI framework and the accounting standards; and difficulties faced by corporates in doing business.
The proposed amendments would affect as many as 78 existing sections of the company law. Also, fifty new changes are being proposed to existing rules.
Out of the 470-odd sections of the new Companies Act 2013, the government has already notified 283 for implementation.

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