New Delhi: Government today cleared a new companies bill that limits its role and also provides for a radical change in the way nearly seven lakh corporate entities are run.
The much-awaited Companies Bill, 2008, which will replace the Companies Act, 1956 provides for appointment of a minimum 33% independent directors on the board and restrictions on firms to raise deposits from public.
The bill will be introduced in coming session of Parliament in October.
“Existing Act is not in tune with the times...wholesale refurbishment of the Act was needed. This is a far-reaching bill. It will revolutionise the whole Companies Act,” said Science and Technology Minister Kapil Sibal.
He said no issue of shares on discount will be allowed. At present, some promoters issue shares at discount for themselves, he said.
The proposed law recognises the chief executive officer, chief financial officer and company secretary as “key managerial personnel” and provides for a single forum for mergers and acquisitions.
The right of an investor over a dividend or a security not claimed for more than seven years will not be taken away. The investor education and protection fund will be administered by a statutory authority.
A more effective regime has been provided for by inspection and investigations, and provisions of recovery and disgorgement have been included.
The bill also provides for special courts to deal with offences and scrapping of minimum paid-up capital requirement.