Companies Bill sails through in Parliament; would ensure ease of doing business

Parliamaent on Tuesday approved the Companies (Amendment) Bill, 2017 to strengthen corporate governance standards, initiate strict action against defaulting companies and help improve ease of doing business in the country.

The bill provides for more than 40 amendments to the Companies Act, 2013, which was passed during the erstwhile UPA regime.

The Rajya Sabha passed the Bill by a voice vote. It was cleared by the Lok Sabha during the monsoon session in July this year. Replying to issues raised by the members during a discussion on the bill, Minister of State for Corporate Affairs P P Chaudhary said the amendment would ensure better corporate governance and improve the ease of doing business in the country.

Under the Act, certain classes of profitable companies are required to shell out at least two per cent of their 3- year annual average net profit towards Corporate Social Responsibility (CSR) activities. In case of nonexpenditure, such entities are required to provide the reasons for it to the ministry.

The minister said the upper limit of 300 days for filing returns under the Act led to noncompliance and hence changes have been made in the law to improve timely filings.

The bill was first introduced in the Lok Sabha in March 2016 and then referred to the Standing Committee on Finance. After taking into consideration the recommendations of the committee, the Cabinet had cleared a revised bill in March this year.

The latest legislation would help in simplifying procedures, make compliance easy and take stringent action against defaulting companies, Chaudhary said. The minister dismissed the apprehensions raised by members that the government was not doing enough to ensure that companies comply with Corporate Social Responsibility (CSR) provisions.

The minister said the government has already issued notices to many companies for not complying with CSR provisions under the Companies Act.