Parliament approves Bill to enable direct listing of securities abroad

Our Bureau New Delhi | Updated on September 22, 2020 Published on September 22, 2020

Finance Minister Nirmala Sitharaman speaks in the Rajya Sabha during the ongoing Monsoon Session of Parliament, in New Delhi, on Tuesday   -  PTI

Rajya Sabha approves Companies (amendment) Bill 2020

Parliament on Tuesday approved the Companies (Amendment) Bill 2020 with the Rajya Sabha giving its nod for this Bill that among other things seeks enable Indian companies to directly list certain prescribed classes of securities in foreign jurisdictions.

This Bill was passed by the Lok Sabha on Saturday night.

Prior to the latest legislative move, 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.

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 in the Rajya Sabha, Finance Minister Nirmala Sitharaman said the importance of these set of amendments being introduced to Companies Act 2013 were long felt.

Two compartments

These amendments consists of two compartments — first one being 48 amendments that relate to decriminalisation. In the second compartment, 13 sections are getting amended, one new chapter getting added and 3 new section insertions — all essentially for ease of living.

“While we are doing decriminalisation exercise since 2013 the total number of penal provisions have come from 134 to 124 today after the latest Bill. What remains like what was in 2013 is the non compoundable offence section — 35 sections of them that were there in 2013 is there even today. We are not giving opportunity for fraud, deceit and injury to public interest to go away with smaller punishments. They will all be treated with firm hands,” she 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’.

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Published on September 22, 2020
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