New Delhi: The government Tuesday tabled the Companies amendment bill, 2014, in the Lok Sabha for consideration and passage, with Corporate Affairs Minister Arun Jaitley telling the house the act needs changes to improve business climate in the country.
The amendments are being carried out after consultations with industry chambers and business organisations, Jaitley said.
"Most of them (amendments) are intended for one purpose, that is, for1 the ease of doing business," he added.
The amendments to the Companies Act, 2013, which came into effect from April 1 this year, have been proposed in order to address some issues raised by stakeholders.
"Now, after the provisions were implemented... while enforcing the provision, we found that there were certain difficulties with regard to the enforcement of certain provisions or certain errors, while drafting had taken place," he said.
Congress' Veerappa Moily said the bill should be referred to the Standing Committee for re-examination before the amendments are brought out.
The union cabinet approved the amendments earlier this month.
Under the new norms proposed, the paid-up capital criteria has been scrapped while threshold limits for various transactions for getting shareholders' nod has now been stipulated.
Another amendment approves prescribing specific punishment for deposits accepted, a condition that was left out in the act inadvertently, the ministry said.
Towards meeting a "corporate demand," an amendement proposes "prohibiting public inspection of Board resolutions filed in the registry".
Among the major concerns of stateholders were protecting confidentiality of board resolutions, as well as the provision of auditors being required to report suspected frauds at the companies audited by them.
Stakeholders were also concerned that stringent regulations for related party transactions, or those transactions between the company and another in which a board member or members are interested, could hurt routine business activity.
The amendment also proposes to exempt corporates from the need to get shareholders' nod in the case of related party transactions valued lower than Rs.100 crore or 10 percent of net worth.
Under the old system, shareholders' permission through a special resolution was required in case of related party transactions for all firms with a paid up capital of Rs.10 crore or more.
Another amendment exempts related party transactions between holding companies and wholly owned subsidiaries from the requirement of approval of non-related shareholders.