The Cabinet today approved the Companies Bill, 2008, that proposes to free 7 lakh companies in India from the clutches of government control and give them a free hand in appointing top executives and fixing their pay packets. It will be introduced in the upcoming session of Parliament in October.It provides India Inc the leeway it needs to grow fast in a globalised world by doing away with the limit on subsidiaries lending great flexibility in structuring ownership. It also allows one-person companies with simple compliance regime to promote entrepreneurship and also helps partnership firms to acquire scale by letting them have up to 100 partners from just 20 now.The proposed legislation also enables board meetings to be conducted via video conferencing, recognises votes cast through email and allows companies to keep their books-of-accounts in electronic forms as a legal document.The Bill, nevertheless, has provisions for checks and balances. It does make it difficult for companies to raise public deposits and treats insider trading by directors as a criminal offense. It proposes to bar the issue of shares at a discount to owners of a company and retains a clause that makes it mandatory for company boards to have at least 33 per cent independent directors. For listed companies, markets regulator Sebi, however, has set a minimum requirement of 50 per cent.The new Bill almost halves the number of clauses in the Companies Act, from the current 543. Most of the operative provisions have been shifted to the rules, making their amendment less clumsy for the ministry of corporate affairs. It provides for special courts to deal with company-related disputes. Among the other changes sought to be brought in are doing away with the right of an investor over a dividend or security not claimed for more than seven years.What it says.Makes it almost impossible for companies to raise public deposits Bars the issue of shares at a discount to the owners of a company The Does away with govt approval for top appointments and salaries Provides for for 1-person firm, simpler compliance for small entitiesAllows e-accounting, digital certification and votes via emailRetains 33 per cent independent directors; Sebi set 50 per cent for listed firms Recognises chief executive officer, chief financial officer and company secretary as key managerial personnel
