The Lok Sabha on Saturday night passed the Companies (amendment) Bill 2020 that, among other things, seeks to allow public companies to directly list certain prescribed classes of securities in foreign jurisdictions.
Under the current legal framework, Indian companies cannot directly list their securities abroad without getting themselves listed in domestic bourses.
This Bill also stipulates that specified classes of unlisted companies will have to prepare and file their periodic financial results.
Decriminalise offences
The Bill also seeks to decriminalise certain offences under the Companies Act, 2013, in case of defaults which can be determined objectively and which otherwise lack any element of fraud or do not involve large public interest.
Replying to the discussions on the Bill, the Finance Minister Nirmala Sitharaman said the Government is focused on decriminalising provisions in company law so as to improve Ease of Doing Business, especially for small companies and this Bill will take this process forward. The number of penal provisions will be brought down from 134 to 124. However, there will be no change in the non-compoundable offences provisions which will remain at 35 as was the case in 2013, when the latest Companies Act was enacted, Sitharaman said.
CSR carry forward
On the issue of Corporate Social Responsibility (CSR), the Bill provides that Companies that have CSR spending obligation up to ₹50 lakh would not be required to constitute a CSR committee.
Also, eligible companies under CSR provision (Section 135 ) will be allowed to set off any amount spent in excess of their CSR spending obligation in a particular financial year towards such obligation in subsequent financial years.
Besides introducing a separate chapter for “producer companies”, the Bill also pave the way for setting up of Benches of the National Company Law Appellate Tribunal.
To enable easier listing of debt securities, the Bill also proposes to empower the Centre to exclude — in consultation with SEBI — certain class of companies from the definition of “listed company”.