Companies Act needs changes to improve business climate: Jaitley

To address concerns raised by the corporates, the govt has also agreed to relax a number of norms including those pertaining to related party transactions

The Companies Act needs to be amended to improve the business climate in the country, Corporate Affairs Minister Arun Jaitley said today in the Lok Sabha as he pushed a bill in this regard for consideration of the House.

Congress, on the other hand, wanted the bill to be referred to the Standing Committee for closer scrutiny.

The 14 proposed amendments 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 amendments are being carried out after consultation with industry chambers and business organisations, Jaitley said while moving the The Companies (Amendment) Bill, 2014, for consideration and passage.

"Most of them are intended for one purpose, that is, for the ease of doing business," said Jaitley, who also is the Finance Minister.

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 original Companies Act 1956 had 600 plus provisions and it was re-worked and a law with 470 sections and most of the provisions have been implemented.

Arguing for the need for amendments, Jaitley said, "Now, after the provisions were implemented, while enforcing the provision, we found that there were certain difficulties with regard to the enforcement of certain provisions or certain errors, while drafting had taken place."

Participating in the debate, Veerappa Moily (Cong) said that Bill should be referred to the Standing Committee to re-examine it before the amendments are brought out.