New Companies Bill will be enacted this year: Moily
10 Sep 2011
The new Companies Bill, which has been circulated among the various ministries for their comments, will hopefully be passed by parliament in 2011 itself, said corporate affairs minister M. Veerappa Moily.
''We expect the cabinet to take it up for approval within next 20-25 days immediately after we receive comments from the various ministries,'' Moily told reporters in Bangalore. The new bill, which replaces a 50-year-old act, provides for greater shareholder say and stricter corporate governance norms.
The bill envisages concepts including class-action suits, fixed terms for independent directors and corporate social responsibility. It proposes that companies should keep apart two per cent of the average profit of the preceding three years for CSR activities, a move that has been opposed by many in the corporate world.
The proposed new legislation seeks to prohibit insider trading by directors and top managers and will treat such activities as a criminal offence. It will also tighten laws for raising money from the public.
It requires public listed companies above a prescribed size to reserve a third of all seats on the board for independent directors, who cannot do business with the company.
The United Progressive Alliance (UPA) government had introduced the Companies Bill (2008), but it lapsed with the dissolution of the Lok Sabha. The new bill was introduced a year later.
