Cabinet to consider new simplified company law

New Delhi, Aug. 28 The much-awaited Bill to replace the existing Companies Act, 1956 is expected to be taken up by the Union Cabinet for approval at its meeting slated for Friday. The Bill envisages a simplified company law that also does away with redundant provisions of the existing Act, official sources said. The proposed new law will give a substantive legal framework while leaving the procedural issues to the rules to be notified subsequently. Sources said that the objective of the new law would be to, among other things, promote shareholders’ democracy, replace the approval-based system with one of responsible disclosure, promote good corporate governance and provide effective protection to investors. Besides, it will encourage self regulation by corporates. For instance, government approval for appointment of directors and the quantum of their remuneration may be dispensed with. Even related party transactions are not likely to be regulated. The proposed new law is also expected to simplify the provisions relating to mergers and acquisitions.

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