Within months of the new Companies Act coming into force, the government on Tuesday cleared a slew of changes to this law to make it easier for corporates to do business and to ensure severe punishment for those raising illegal deposits from the public.
This would be among the first major initiatives by the government to make changes in the country's regulatory framework to improve its global ranking for ease of doing business, where India has been ranked very low at 142nd position in the latest World Bank report.
The 14 proposed amendments, which were approved by the Union Cabinet this evening, also include provision to ensure that frauds beyond a certain threshold would need to be mandatorily reported by the auditors to the government.
To address concerns raised by the corporates, the government has also agreed to relax a number of norms including those pertaining to related party transactions, while resolutions passed by the companies' boards would not be subjected to public inspection.
The new Companies Act, which came into force with effect from April 1 with some provisions yet to become operational, has faced stiff criticism for many provisions.
The new law, put in place by the previous government, has replaced a nearly six-decade old Companies Act, 1956, but the new government has been indicating for quite some time that it would bring in necessary changes to address concerns raised by various stakeholders including corporates.
The Companies (Amendment) Bill, 2014, cleared by Union Cabinet chaired by Prime Minister Narendra Modi, would now go to the Parliament to bring into effect necessary amendments to the existing Act.