Cabinet relaxes 14 Changes as proposed by professionals and corporate

The Cabinet on 2.12.14 cleared 14 changes in the Companies Act, 2013, to ease business in India. The most demanded amendments is  replacing ‘special resolution’ with ‘ordinary resolution’ for approval of related-party transactions by minority shareholders. The Companies Act, 2013, was notified in August, 2013 Out of 470 sections only 283 sections and 22 sets of rules related such sections have been brought into force and more than 50% of the Act is yet to be enforced.
Various stakeholders including corporate raised concerns and demanded changes to ease the business for small companies. The new amendments as demanded by Corporate and cleared by the Cabinet include:

-         Omit the requirement for minimum paid up share capital

-          Propose to exempt related party transactions between holding companies and wholly owned subsidiaries from the requirement of minority shareholders’ approval.

-         Empower the Audit Committee to give omnibus approvals for related party transactions on annual basis.

-         Prohibit the public inspection of the board resolutions filed with the Registrar of Companies.

-         Ensure that frauds beyond threshold limits need to be mandatorily reported by the auditors to the government and disclosed in the board report.

-         Restrain companies from raising illegal deposits, prescribing specific punishment for deposits accepted under the new Act. 

-         Provision for writing off past losses/depreciation before declaring dividend for the year.

-         Provide the winding up of companies would be heard by a two-member instead of three-member bench.

-         Provide the bail restrictions applicable only for offence relating to fraud under section 447 of the Act.

-          Ensure that special courts would try only offences carrying imprisonment of two years or more and minor violations can be resolved by magistrates.