New Bill proposes one person company concept

New Bill proposes one person company concept The new Company Bill, which proposes to do away with redundant provisions of the existing Companies Act, 1956, envisages a new entity in the form of one person company (OPC), while empowering the Government to provide a simpler compliance regime for small companies. “The Bill will provide a substantive legal framework while leaving the procedural issues to the rules to be notified subsequently,” said the Minister for Corporate Affairs, Mr Prem Chand Gupta.“The Bill, which would be introduced in the forthcoming session of the Parliament, seeks to provide for single comprehensive legal framework from incorporation to liquidation and winding up. “Articulation of shareholders democracy with protection of the rights of minority stakeholders, responsible self regulation with disclosures and accountability has been the objective behind this simplified company law,” he added. It also envisages that Government approval for appointment of directors and the quantum of their remuneration is not required. Even related party transactions are not to be regulated. The proposed new law also simplifies the provisions relating to mergers and acquisitions. New voting rights The Bill also provides for shares with differential voting rights to be done away with and valuation on non-cash consideration for allotment of shares through independent valuers. The new law facilitates joint ventures and relaxes restrictions on limiting the number of partners in entities such as partnership firms and banking companies to a maximum 100 with no ceiling on professional firms that are regulated by special Acts such as Chartered Accountants, Company Secretaries, Cost Accountants, and Advocates Act.It provides for statutory recognition to audit, remuneration and stakeholders grievances committees of the board. Besides, it also recognises the Chief Executive Officer, the Chief Financial Officer and the Company Secretary as the key managerial personnel. The Bill recognises insider trading by company directors/KMPs, as an offence with criminal liability. A more effective regime for inspections and investigations of companies while laying down the maximum and minimum quantum of penalty for each offence with suitable deterrence for repeat of offences has been proposed, Mr Gupta said. The proposed Bill also facilitates use of electronic modes by companies for their international process such as keeping books of accounts, allowing voting by shareholders through electronic mode, and conducting board meetings through video conferencing. – www.thehindubusinessline.com

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