Companies Act Needs Comprehensive Review: CII

By 1 2 1 News Reporter

Chandigarh 14^th June:- Darpan Kapoor, Chairman, CII Chandigarh Council while addressing a Seminar on Understanding the Nuances of Transfer Pricing & Companies Act, 2013,said that CII has called for a comprehensive review of the Companies Act 2013 and Companies Rules, 2014 issued thereunder. "Due to the hurried pace in which the Companies Act, 2013 and the Companies Rules, 2014 were implemented, the industry barely got an opportunity to absorb and understand the provisions or their impact in their entirety. Many new concepts are being introduced in the legislation for the first time, and practices with respect to these need to be allowed to evolve over time. However, the rush to notify the Act has introduced disruptive features making it harder for corporates to ensure compliance.

He further shared that CII has received many views and requests for revisions / clarifications of complying with the Company's Act 2013. A detailed note on such views has been submitted to the Ministry of Corporate Affairs with an earnest request to review or clarify them. CII hopes that the new government would take into consideration few difficulties, especially the understanding being faced by corporates and take corrective steps in consultation with all stakeholders.

Vishwas Panjiar, Director-Direct Tax & Regulatory Expert, Walker Chandiok & Co LLP said that all new Companies Act 2013 that has replaced the old Companies Act, 1956, is a new beginning for Indian Industry as it makes comprehensive provisions to govern all listed and unlisted companies in the country. He added that the Act proposes a fast track and simplified procedure for mergers and amalgamations of certain class of companies such as holding and subsidiary, and small companies after obtaining approval of the Indian government. It also permits cross border mergers, both ways; a foreign company merging with an India Company and vice versa but with prior permission of RBI.

He further informed that it proposes E-Governance for various company processes like maintenance and inspection of documents in electronic form, option of keeping of books of accounts in electronic form, financial statements to be placed on company's website, etc. Also, for the first time this Act codifies the duties of directors. it makes sure that every company shall have at least one director who has stayed in India for a total period of not less than 182 (one hundred and eighty two) days in the previous calendar year," he added."It is a boon for private companies in terms of shareholding as it increased the number of maximum shareholders in a private company from 50 to 200. Also, it introduces new form of private company, i.e., one person company is introduced that may have only one director and one shareholder. The Company's Act 1956 required minimum two shareholders and two directors in case of a private company.