By IANS,
New Delhi : The federal cabinet Thursday gave its nod to amendments in companies law that seeks to improve corporate governance, ensure transparency and make independent directors more accountable.
The Companies Bill 2011 will replace the regulation of 1956.
“The new Companies Bill is designed for the 21st century,” Finance Minister P Chidambaram said at a media briefing after the cabinet meeting here.
He expressed hope that the new Companies Bill will be passed by the parliament in the winter session.
“Official amendments have been approved today and I hope that the bills will be passed in the winter session of parliament,” he said.
The finance minister said the proposed regulation was aimed at addressing the changing dynamics of the Indian corporate sector. “The existing bill is outdated,” he said.
He said the cabinet has accepted most of the recommendations of the standing committee. The bill seeks to make independent directors more accountable and bring in clarity on spending on corporate social responsibility (CSR) activities.
“The Companies Bill, 2011, on its enactment, would allow the country to have a modern legislation for growth and regulation of corporate sector in India,” according to an official statement released after the cabinet meeting.
Provisions relating to separation of office of Chairman and Managing Director (MD) modified to allow, in certain cases, a class of companies having multiple business and separate divisional managing directors to appoint same person as chairman as well as managing director.
On the corporate social responsibility, the proposed legislation says that the “company shall give preference to local areas where it operates, for spending amount earmarked for Corporate Social Responsibility (CSR) activities.”