Companies Bill gets cabinet nod

With the Companies Bill getting the cabinet nod to incorporate crucial changes to it, the government has managed to break a legislation deadlock. The changes in the bill, which has been pending for approval for two decades, aim at improving corporate governance, increasing transparency and making independent directors more accountable. 

Speaking to CNBC-TV18 Verappa Moily said Competition (amendment) Bill has been approved by the cabinet. The bill will be tabled during the winter session of parliament. Speaking on the corporate social security (CSR), he said companies which cannot spend 2% on it will need to give explanation.

The main Opposition BJP has welcomed passing of the bill, but will oppose two other reforms that got cabinet okay, namely FDI in pension and insurance. Meanwhile corporate tax lawyer HP Ranina commented on the big-ticket decisions on Thursday. "Yes ofcourse. I think we must congratulate the government for taking bold decisions. Let's hope that all the reforms are legislated soon because that is important. Merely getting approval of the cabinet is not enough, because this only the first step. Let’s hope that the Bills go through in Parliament and the government is able to win over the Opposition."

Below are the changes in the Companies Bill:

*Bringing ‘whole-time directors’ within the purview of ‘key managerial personnel’;

*Pegs the rate of interest on inter-corporate loans with G-Secs

*Greater clarity on criminal liability of auditors;

*Annual ratification of appointment of auditors for five years;

*CSR mandatory subject to explaining reasons for shortfall,

*Introducing a new offence of falsely inducing banks for credit;

*Damages imposed on auditors to be expeditiously defrayed

*Clarification of provisions relating to 'private placement'

*Removal of criminal liability in cases of technical defaults