The Companies Amendment Bill || What has changed and what has not

Piloted by Nirmala Sitharaman, finance minister, the Lok Sabha recently passed a Companies (Amendment) Bill 2019. The bill has also been passed by the Rajya Sabha. The Companies Bill is a legal document which overlooks and guides the commercial activities in India. It is a key document which states certain norms and segregates the mandate of departments to check that all activities undertaken are legal and are not exploitative in nature to ensure that overall business is carried out smoothly. In this article, we are going to cover everything you need to know about this bill.

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Aim Of The Companies Amendment Bill 2019

The aim behind introducing the companies amendment bill is to tighten the Corporate Social Responsibility (CSR) norms. Finance Minister Nirmala Sitharaman said that India is the first country to make CSR spending mandatory by law. It also aims to ensure that stricter action is taken against non-compliance of the company law regulations. By segregating and re-categorising certain duties, it has attempted to restrict the attention of certain departments to more specific issues. The main objective is to enhance the ease of doing business. The government also wishes to reduce compliance burdens on companies, especially on the smaller ones, and has made changes accordingly.

What Has Been Changed?

Image Source - RSTV

The main focus of the bill has been on CSR duties. According to the bill, companies earning a profit of over Rs 5 crore and turnover of Rs 100 crore or net worth of Rs 500 crore, are required to shell out at least 2% of their 3 year annual average net worth towards CSR norms. In case money remains unspent for one plus three years, this particular amount of money will have to be moved to a special account. However, this “special account” has not been defined by law.

Also, the bill empowers the Registrar Of Companies (ROC) to initiate action for removal of companies from ROC if its not carrying out any business or operation in accordance with the company law. As mentioned by Sitharaman, so far 4 lakh shell companies have been deregistered.

Further, 16 minor offences have been recategorized as purely civil defaults. Central government will now be looking over the conversion of a public company to a private company instead of the National Company Law Tribunal (NCLT) and the functions with regard to dealing with applications for change of financial year. The Bill further points that it shall provide more clarity about certain powers of the national financial report.

What is CSR?

CSR stands for Corporate Social Responsibility. It is nothing but a management concept where companies integrate social and environmental concerns in their corporate operations. Examples of CSR concerns are - human rights, gender balance, environmental management, community relations etc.

Conclusion

The Companies (Amendment) Bill 2019 is a positive step in India’s growth as an economy. By directing more attention towards corporate social responsibility, the government has made sure that the we grow not just commercially but also socially. This would make people more conscious of the nature of their daily business activities. Also, by identifying and deregistering shell companies, we would be able to calculate the growth better. Re-categorising the duties of certain departments is a great step.

Hi, I am Ashima Pargal. I am currently pursuing B.A( Hons) Media and Communication from O.P Jindal Global University. I like writing about matters which intrigue me. I also write poems and love listening to music.

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