The Indian Parliament has given its assent to the Companies Bill 2012 which was passed by the Upper House on 8 August 2013. The Bill, which will replace the Companies Act 1956, was passed in the Lower House in December 2012. It seeks to increase levels of transparency, progress corporate governance norms, augment accountability of corporates and auditors, guard minority shareholders, and provide an enhanced framework for insolvency regulation and institutional structure.
Some of the main features are summarised below:
Greater accountability of companies
Mergers and acquisitions
The Bill prescribes a simplified procedure to facilitate mergers, acquisitions and amalgamations for holding companies and wholly owned subsidiaries, two or more small companies, and certain other classes of companies. Mergers, acquisitions and amalgamations between all other companies will be approved by the National Company Law Tribunal.
A stricter regime is proposed to regulate acceptance of deposits from the public. The Bill also contains provisions for class action suits, including the minimum number of people required for such suits and certain safeguards against misuse.
National Company Law Tribunal
The Bill defines the qualifications and experience required by members of the National Company Law Tribunal. It also states that appeals relating to its decisions will be heard by the National Company Law Appellate Tribunal.