India to amend ‘Companies Act’ for ease of doing business

companies act

Placing ‘ease of doing business in India’ at the top of the government’s priorities, the country is planning to introduce an amendment bill for the Companies Act, 2013, in the ongoing session of parliament. While presenting the General Budget 2016-17 in Lok Sabha, the Union Finance Minister Arun Jaitley said that this will remove the difficulties and impediments to ease of doing business. The Bill would also improve the enabling environment for start-ups. The registration of companies will also be done in one day.

India has often been criticised for uneasy business environment and red-tapism, especially for setting up a business in the country.

Seeking to make it easier to start a business in India, the Corporate Affairs Ministry had initiated a public consultation process on the suggested changes and had invited comments from all concerned stakeholders. The Ministry had constituted a Companies Law Committee in June 2015 to examine and make recommendations on the issues arising out of implementation of the Companies Act, 2013.

The ‘Companies Law Committee’ held consultations with all the stakeholders before making its recommendations. The committee had received more than 2000 suggestions during the discussions. It comprised all industry chambers, professional institutes, law firms, financial sector entities and other regulators.

The main aim of amending the ‘Companies Act’, 2013 is to improve ease of doing business, encourage start ups. The government also seeks to bring provisions in the act that would bring greater clarity. The committee has proposed changes in 78 sections of the Companies Act, 2013. It is expected that along with consequential changes, this would result in bringing about nearly 100 amendments to the Act. Nearly 50 amendments to the rules were proposed with recommendations. In a strong pitch to potential investors and businesses, the bill would seek to make improvements in areas such as corporate governance and companies incorporated outside India.

Whether the government would live up to its promise of facilitating registration of a new company in one day is left to be seen.

India moved up four spots in the World Bank’s Doing Business rankings to 130 in October 2015. PM Narendra Modi aims to take India in top 50 in the global rankings in five years.

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