New Delhi: The Parliament approved the new Companies Bill that will make sweeping changes in the way firms operate and are regulated and replace a nearly six-decade-old legislation.
The new bill, which now needs the President's nod to become law, makes it mandatory for companies to spend on social welfare, empowers investors against frauds committed by promoters, encourages companies to have women directors, and seeks to bring in greater transparency in corporate governance matters such as executive salaries and the role of auditors.
Corporate Affairs Minister Sachin Pilot termed the passage of the legislation a "historic feat" and said it will give impetus to the country's growth momentum by ushering in a regime of "less regulations and more compliance."
The bill replaces the existing Companies Act, 1956, which has been amended at least 25 times in the past 57 years, with many of its provisions found to be outdated and inadequate.
The passage of the bill, which is spread across nearly 30 sections and over 300 pages, was widely welcomed by stakeholders, including industry bodies, political leaders and consultants.
"Now that the law is ready, it is time to focus and work on the practical aspects of complying with its provisions. One such vital provision is surely the clause dealing with CSR spend," CII said in a statement.
Sharing similar views, Ficci said: "We welcome the passage of the Bill which will give India a comprehensive and contemporary legislation. This legislation is indeed a milestone in the history of company law and will revolutionise the administration and management of businesses in the times to come".
"The focus of the bill is to enhance transparency and ensure fewer regulations, self-reporting and disclosure...It will outline the positivity in the economy," said Pilot, who has aggressively sought the support of lawmakers and other stakeholders for the bill since becoming Corporate Affairs Minister in October 2012.
The Bill was passed by the Lok Sabha more than seven months ago. Since then, its passage in the upper house has been delayed by disruptions in Parliament.
It has been almost three years since the submission of first report on the Companies Bill by the Parliamentary Standing Committee on Finance.
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