After over a decade India is set to get a new company law that is modern, growth-oriented and seeks to shift from control of corporates to self-regulation.
Passed by the Rajya Sabha on Thursday, the Companies Bill, 2012, when enacted into law, will replace the Companies Act, 1956. The Elders’ nod comes nearly eight months after the Lok Sabha gave its assent to the Bill.
The passage of the Companies Bill is a significant achievement for the ruling UPA-II that has been facing criticism for policy paralysis. It is a personal win for Corporate Affairs Minister Sachin Pilot.
Key industry chambers welcomed the passage of the Bill.
The Upper House did not suggest significant amendments to the Bill. On the changes suggested on the corporate social responsibility issue, Pilot, said the concerns will be addressed when framing the Rules for the Act.
Replying to the discussion on the Bill, Pilot hoped it will push economic growth. He said 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,” he claimed.
Citing the manifold increase in the number of companies, Pilot said the new Act will help develop better corporate governance practices. The Act also makes independent directors more accountable.
Initiating the debate, Congress’ Mani Shankar Aiyar said country needs strong regulators in the sector. Comparing companies to tigers, he said tigers are dangerous when unleashed and asked the Minister to improve the regulatory mechanism. He wanted the Centre to ensure that CSR activities reach the poor sections.
P. Rajeeve (CPI-M) demanded that the clause on CSR be amended, terming it to be against the “very purpose” of the Bill. The Finance Standing Committee had also suggested amendment of the clause. . Pilot said 96 per cent of the Finance Standing Committee’s suggestions were accepted by the Ministry.