New Delhi: The Cabinet is likely to approve the draft of the long-awaited Companies Bill 2011 at a meeting scheduled for Tuesday. The proposed law is aimed at making companies more accountable while making it easier for them to do business with less regulation.
The Bill, once passed by Parliament, is also expected to check fraud more effectively.
“The ministry’s commitment is to introduce the Bill in Parliament in the forthcoming winter session. It will replace the archaic 65-year-old Companies Bill,” said R.P.N. Singh, minister of state for corporate affairs.
Since the Bill is based on wide consultations with all stakeholders, it will go a long way toward simplifying regulations while protecting investors and shareholders, he said.
Work on the Bill, which also makes it easier to start and shut companies, started in 2004. It was first introduced in Parliament in 2008 but lapsed after the House was dissolved on account of general elections. The ministry of corporate affairs has been struggling to reintroduce the Bill in Parliament for the last two years.
The Bill, which seeks to make firms and their promoters more accountable by making them responsible for their own behaviour, will affect around 800,000 companies.
It will also introduce concepts that are new to India, including the one-person company and class-action suits.
In September, the Prime Minister’s Office (PMO) asked the corporate affairs ministry to expand the role of independent directors, increase the representation of women on boards, and strengthen the Serious Fraud Investigation Office (SFIO).
SFIO is a multidisciplinary investigative arm of the corporate affairs ministry that has chartered accountants, company secretaries, revenue and custom service officials, besides those from the police department. It helped investigate the fraud at Satyam Computer Services Ltd in 2009.