Rattled by the abysmally low 142nd ranking of the country in the latest World Bank report in terms of ‘ease of doing business’, the NDA Government on Tuesday okayed a series of amendments in the newly created Companies Act, ensuring more corporate-friendly norms as well as introducing severe punishment for those raising illegal deposits from the public.
This would be among the first major initiatives by the Government to make changes in the country’s regulatory framework to improve its global ranking for ease of doing business, in the aftermath of the report.
The 14 proposed amendments, which were approved by the Union Cabinet on Tuesday evening, also include provision to ensure that frauds beyond a certain threshold would need to be mandatorily reported by the auditors to the Government.To address concerns raised by the corporates, the Government has also agreed to relax a number of norms including those pertaining to related party transactions, while resolutions passed by the companies’ boards would not be subjected to public inspection.
The new Companies Act, which came into force with effect from April 1, 2014 with some provisions yet to become operational, has faced stiff criticism for many provisions.The new law, put in place by the previous UPA Government, has replaced a nearly six-decade old Companies Act, 1956, but the new dispensation has been indicating for quite some time that it would bring in necessary changes to address concerns raised by various stakeholders including corporates.
The Government also approved amendments to a law to strengthen capital base and financial stability of Regional Rural Banks (RRBs).The amendments to the RRBs Act, 1976 were cleared by the Cabinet chaired by Prime Minister Narendra Modi and would be introduced in Parliament. The amendments are aimed to enhance authorised and issued capital to strengthen their capital base and to bring flexibility in the shareholding between Central Government, State Government and sponsor bank, said an official statement.