New Delhi, December 11: The Government of India in its latest notification has proposed amendments to the Companies Act, 2013. The Companies Act 2013 is an Act of the Parliament of India on Indian company law which regulates incorporation of a company, responsibilities of a company, directors, dissolution of a company. The following amendments have been made:
If any company fails to commence its business within one year of incorporation or fails to continue its business for preceding two financial years, in such a case, Registrar of companies (RoC) has a right to dissolve the company. However, the law doesn’t spell out what happens to the assets of that company. Keeping this in mind, the amendments have been made to the Companies Act, 2013. The proposed amendment puts forward that once a company is dissolved, the board of Administrators will be appointed to dispose of the assets and the proceeds from that will go to the Consolidated Fund of India.
Based on the recommendation of the law committee, the government proposed that the sum total of the pecuniary relationship of an independent director with the company, it’s holding, associate or subsidiary company in a year, should not exceed more than 25 percent of her income. In addition to the proposed 25 percent cap, income from professional services cannot be more than 10 percent of the independent director’s income.
Corporate Social Responsibility (CSR)
As mandated under the Company law, Companies need to spend at least 2 percent of their average net profit for the immediately preceding three financial years on corporate social responsibility activities. If they fail to do so, the reasons for the same need to be specified. The government has proposed an amendment that will make CSR spends mandatory. It has proposed that the unspent amount will have to be transferred in a special account within 30 days from the end of a financial year. This amount will then have to be spent on CSR activities within three years from the date of transfer.
Since its notification in April 2014, the Companies Act has seen amendments almost every month. Last month, the law was amended via an ordinance. If passed, it will bring more transparency and clarity to the existing law.
Read the notification below:[pdf-embedder url=”https://www.lawchronicles.net/wp-content/uploads/2018/12/NoticeAmendmentsCA2013_05112018.pdf”]