* The Rajya Sabha today passed the much-awaited Companies Bill.
* The Bill had been passed by the Lok Sabha in December last year.
* The Companies Bill, which will replace the nearly 57-year-old Companies Act, enacted in 1956.
* This bill is aimed at protecting the interest of employees and small investors.
* Now that both houses of Parliament have passed the Bill, it will go to President Pranab Mukherjee for his assent before it becomes law, following which the Ministry of Corporate Affairs will issue a notification.
"Features of the Companies bill, 2011"
* The new rules make the earmarking of funds by companies for corporate social responsibility (CSR) spending mandatory. Companies are required to spend at "least 2 per cent" of their net profit on CSR. The companies will also have to give preference to the local areas of their operation for such spending. If they are unable to meet CSR norms, they will have to give explanations and may even face penalty.
* To help in curbing a major source of corporate delinquency, the Bill introduces punishment for falsely inducing a person to enter into any agreement with bank or financial institution, with a view to obtaining credit facilities.
* The new legislation has more provisions to guard the interests of employees. It mandates payment of two years' salary to employees in case a company shuts operations.
* The appointment of auditors for five years shall be subject to ratification by members at every annual general meeting. The amended legislation also limits the number of companies an auditor can serve to 20 besides bringing more clarity on criminal liability of auditors.
* The new law also makes its mandatory for companies that one-third of their board comprises "independent directors" to ensure transparency. Also, at least one of the board members should be a woman.
* The maximum number of directors in a private company has been increased from 12 to 15, which can be increased further by special resolution.
* The financial year of any company can end only on "March 31" and the only exception is for companies which are holding/subsidiary of a foreign entity requiring consolidation outside India.
* It also makes auditors subject to criminal liability if they knowingly or recklessly omit certain information from their reports.
* The Bill has a provision that keeps tabs on exorbitant remunerations for the board of directors and other executives of the companies. This will protect the interest of shareholders as well as employees.
* The Companies Bill also provides for setting up of special courts for speedy trial and stronger steps for transparent corporate governance practices and curb corporate misdoings.
* The Bill had been passed by the Lok Sabha in December last year.
* The Companies Bill, which will replace the nearly 57-year-old Companies Act, enacted in 1956.
* This bill is aimed at protecting the interest of employees and small investors.
* Now that both houses of Parliament have passed the Bill, it will go to President Pranab Mukherjee for his assent before it becomes law, following which the Ministry of Corporate Affairs will issue a notification.
"Features of the Companies bill, 2011"
* The new rules make the earmarking of funds by companies for corporate social responsibility (CSR) spending mandatory. Companies are required to spend at "least 2 per cent" of their net profit on CSR. The companies will also have to give preference to the local areas of their operation for such spending. If they are unable to meet CSR norms, they will have to give explanations and may even face penalty.
* To help in curbing a major source of corporate delinquency, the Bill introduces punishment for falsely inducing a person to enter into any agreement with bank or financial institution, with a view to obtaining credit facilities.
* The new legislation has more provisions to guard the interests of employees. It mandates payment of two years' salary to employees in case a company shuts operations.
* The appointment of auditors for five years shall be subject to ratification by members at every annual general meeting. The amended legislation also limits the number of companies an auditor can serve to 20 besides bringing more clarity on criminal liability of auditors.
* The new law also makes its mandatory for companies that one-third of their board comprises "independent directors" to ensure transparency. Also, at least one of the board members should be a woman.
* The maximum number of directors in a private company has been increased from 12 to 15, which can be increased further by special resolution.
* The financial year of any company can end only on "March 31" and the only exception is for companies which are holding/subsidiary of a foreign entity requiring consolidation outside India.
* It also makes auditors subject to criminal liability if they knowingly or recklessly omit certain information from their reports.
* The Bill has a provision that keeps tabs on exorbitant remunerations for the board of directors and other executives of the companies. This will protect the interest of shareholders as well as employees.
* The Companies Bill also provides for setting up of special courts for speedy trial and stronger steps for transparent corporate governance practices and curb corporate misdoings.