The companies act of 1956 will soon go to attic as the cabinet approved the decision to introduce the new companies bill of 2008 in the parliament. The bill was the result of 4 years effort by a committee headed by JJ Irani.
If passed, the companies bill of 2008 will ease the formation and functioning of corporates in India. It promises to bring lots of liberal changes that encourage entrepreneurship in India.
Some of the salient features of the proposed bill are:
1. OPC - A one person company which can be operated by a single entrepreneur
2. relaxed provisions in
- remuneration to directors,
- related party transactions,
- attachment of data of subsidiary companies etc
3. the number of independent directors on the board is reduced to 1/3 from 1/2
4. done away with promoters buying shares on discount
5. introduction of stringent penalties to corporate frauds
6. special courts for corporate offences
7. relaxed upper limit on partners in a firm - new proposal allows up to 100
8. board meetings can be held over video conference and approvals over e-mails
9. single forum for M&A
10. provision to claim dividend even after 7 years