Date: Monday, August 6th, 2018 by Victoria Sisson.
GILC member firm Khaitan Associates gives an update on the amendment of the Indian Companies Act
As another step in the direction of enhancing the “ease of doing business in India”, the Indian Parliament recently passed the Companies Amendment Bill, 2017 (“Amendment Bill”), which seeks to amend the Companies Act, 2013 (“Act”). The Amendment Bill is awaiting presidential assent before it is made law.
The Amendment Bill is largely designed to address the existing implementation difficulties faced by various stakeholders and to strengthen corporate governance standards across India Inc. The Amendment Bill aims to strike a balance between protecting shareholder interests, while simultaneously providing operational flexibility to management. In addition to this, the Amendment Bill provides for stricter action against defaulting companies.
The key amendments proposed include inter alia, simplification of the private placement process to facilitate fund-raising, overhaul of the provisions pertaining to loans given to directors, liberalisation of provisions pertaining to payment of managerial remuneration, removal of the restriction on number of layers of subsidiaries, providing flexibility to unlisted companies and wholly-owned subsidiaries of foreign companies with respect to the venue of an annual general meeting and permitting independent directors to have a pecuniary relationship with the company.
In addition to this, the Amendment Bill seeks to harmonise and align the Act with various other laws, including securities laws, banking laws and applicable accounting standards.
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