Companies Bill, 2009: Focus on corporate governance

The new Companies Bill, 2009, introduced in the Lok Sabha by corporate affairs minister Salman Khurshid today, seeks to bring all corporate entities under a common framework for their regulation, irrespective of the areas of operation.

The new bill has drafted a single comprehensive legal framework that would govern everything corporate - from incorporation to liquidation and winding up - to be administered by the central government. The bill also harmonises the company law framework with the imperative of specialised sectoral regulation, an official release said.

The bill seeks to articulate shareholder democracy with protection of the rights of minority stakeholders, responsible self-regulation with disclosures and accountability, substitution of government control over internal corporate processes and decisions by shareholder control. It also provides for doing away with shares of differential voting rights as also valuation of non-cash considerations for allotment of shares through independent valuers. 

For easy transition of companies operating under the Companies Act, 1956, to the new framework as also from one type of company to another, the new bill provides for a new entity in the form of one-person company (OPC) while empowering the government to provide a simpler compliance regime for small companies and retains the concept of producer companies, while providing a more stringent regime for not-for-profit companies to check misuse.

No restriction is proposed on the number of subsidiary companies that a company may have, subject to disclosure in respect of their relationship and transactions/dealings between them.

For successful implementation of e-governance, the ministry has introduced the `MCA-21' for all the processes involved in meeting compliance obligations, including all internal company processes. The proposed e-governance regime is intended to provide for ease of operation for filing and access to corporate data over the internet to all stakeholders, on round-the-clock basis.