Cabinet clears Companies Bill, amendments to Competition Act

New Delhi: The Cabinet on Thursday gave its nod to the Companies Bill 2011 and amendments to the Competition Act 2002. India Inc has been awaiting this move for some time.

Putting to rest all concerns on whether bank mergers will be out of the Competition Act ambit, Finance Minister P. Chidambaram told newspersons that the Act governs all sectors. But, banks and insurance companies that have got approvals for mandated/forced mergers have been exempted from the purview of the Act.

The proposal after its initial consideration in April, 2012 was referred to a Group of Ministers to examine in detail, with particular reference to jurisdiction of sectoral regulators on Competition related issues.

“Major amendments approved by the Cabinet relate to changing the definition of “turnover”, “Group”, reducing the overall time limit of finalisation of combinations from 210 days to 180 days and insertion of a new Section 5A enabling the Central Government to lay down, in consultation with the Competition Commission of India, different thresholds for any class or classes of enterprises for the purpose of examining acquisitions, mergers and amalgamations by the Commission.

Companies Bill
After nearly two decades of efforts to revamp the exiting Companies Act 1956, the Companies Bill 2011 aimed to give a modern legislation for growth and regulation of corporate sector was approved with certain modifications. The Bill gives a clearer direction to the role of auditor, corporate social responsibility, inter-corporate loans and makes whole-time directors more accountable and defines private placements, among others.

Once the Bill becomes a law, corporates will be expected to give valid reasons if they are not spending the amount earmarked for CSR activities. However, the Bill does not make it mandatory.

What may seem relevant today, the Bill has modified provisions for audit of Government companies by Comptroller and Auditor General of India (C&AG). The modification has been made to enable C&AG perform such audit more effectively.

The provisions relating to restrictions on non-audit services have been modified in the Bill to ensure that such restrictions shall not apply to associate companies. It also gives a transitional period for complying with such provisions.