Amendments to Companies Act - Ease of Doing Business in India
A Bill to make it easy for Companies to do business in India?
Yesterday the Finance Minister said in the Lok Sabha, "it is companies which create jobs. The West Bengal Government does not." Earlier he had mentioned about the closure of Nokia Plant in Tamil Nadu - "On the outskirts of Chennai, Sriperumbudur, an industrial area has come in. One major plant, manufacturing telecommunication handsets, has closed down because of taxation reasons. Just by closure of one major plant, 54,000 jobs lost. When we are talking in terms of ease of doing business, etc., these are not some notional concepts. This is in effect, the direct impact of what our attitude is and how it affects the larger economy of the country."
Why these amendments and what do they correct?
The FM explained:
1. Ease of doing business
2. Drafting errors
3. Oversight
4. Some provisions which are ex-facie oppressive to an environment to do business
The Babus in the Corporate Affairs Ministry are as good as their counterparts in the Finance ministry - and this is no compliment.
The FM said,
There are offences companies commit. If there is a company, which does not follow the procedure and starts collecting deposits, it is a punishable offence. In the Act, they forgot to make it an offence.So it is a case of an oversight, which is being rectified.
The Finance Minister said on fraud reporting:
There is this enabling provision about fraud. When you are auditing the affairs of a company -this is a view put up by the Institute of Chartered Accountants - there may be dozens of irregularities that you will find out. Is every one of them to be reported to the Central Government or are the major ones to be reported?
There is a principle of de minimis (please see ) that triviality is ignored. So, what is very small can be ignored and what are major ones are to be reported. All that it says is that a threshold will be fixed by the Government beyond which all such requirements will have to be reported; otherwise the Department of Company Affairs will become the largest Department in the Government of India. It will have only complaints arising out of some voucher for Rs. 100 which is not available.
The FM concluded:
"There are some provisions, which we are easing. There are some, which were oversight. There are some, which were left out. And there are some which came in but came in as a part of this thinking that we must make doing business extremely difficult. So if somebody is arrested and he belongs to a company, a terrorist can get bail but he should never get bail. Now, this kind of thinking, I am afraid, we do not subscribe to. I, therefore, commend to this Honourable House that these amendments be accepted."
And the Hon'ble House accepted them.