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Amendments to The Companies Act

Topics covered:

  1. Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Amendments to The Companies Act

 

What to study?

For prelims and mains: Key features of the companies act, need for amendments and significance.

 

Context: Govt introduces bill to amend companies law in Lok Sabha. It amends the Companies Act, 2013. 

 

Need:

The amendments aim to ensure more accountability and better enforcement to strengthen the corporate governance norms and compliance management in corporate sector.

 

Key features of the Companies (Amendment) Bill, 2019:

  1. Allows companies to transfer their unspent CSR funds to a separate account and the same has to be spent within three financial years. In case, the money remains unspent, then it should be transferred to any fund specified in Schedule VII of the Act.
  2. Provides more teeth to the central government to deal with violators and reducing burden on special courts.
  3. Seeks to enable the National Financial Reporting Authority (NFRA) to perform its functions through divisions and executive body.
  4. Seeks to empower Registrar of Companies (RoC) to initiate action for removal of a company’s name if the latter is not carrying out business activities as per the Act.
  5. Proposes to transfer some functions from NCLT to the Central government such as dealing with applications for change of financial year and conversion from public to private companies.
  6. In order to curb the menace of shell companies, the Bill proposes making non-maintenance of registered office and non-reporting of commencement of business grounds for striking off the name of the company from the register of companies.