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The Companies (Amendment) Bill gets nod of Parliament
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The Companies (Amendment) Bill gets nod of Parliament

Agency News

New Delhi, Jul 30: A Bill seeking to righter CSR compliance and reduce the load of cases on the National Companies Law Tribunal, on Tuesday got the nod of parliament with the Rajya Sabha passing it by voice vote.The Companies (Amendment) Bill, 2019, moved by Finance Ministe Nirmala Sitharaman, seeks to replace an ordinance. Replying to a debate on the Bill in the Upper hosue, the Finance Minister said that the bill seeks to tighten CSR norms and ensuring stricter action for non- compliance of the company law regulations.

Pointing out the urgency to pass the Bill, the Finance Minister said that the ordinance on the matter was due to lapse on Wednesday. Elaborating on the Companies Amendment Bill 2019, the Minister said Under the Act, if companies which have to provide for CSR, do not fully spent the funds, they must disclose the reasons for non-spending in their annual report.Under the Bill, any unspent annual CSR funds must be transferred to one of the funds under Schedule 7 of the Act within six months of the financial year.

However, if the CSR funds are committed to certain ongoing projects, then the unspent funds will have to be transferred to an Unspent CSR Account within 30 days of the end of the financial year, and spent within three years. Any funds remaining unspent after three years will have to be transferred to one of the funds under Schedule 7 of the Act. Any violation may attract a fine between Rs 50,000 and Rs 25,00,000 and every defaulting officer may be punished with imprisonment of up to three years or fine between Rs 50,000 and Rs 25,00,000, or both.

The amendments in the Companies Act, she added, were aimed at improving ease of doing business . The Minister also said that the National Financial Reporting Authority debars a member or firm from practising as a Chartered Accountant for a period between six months to 10 years, for proven misconduct. “The Bill amends the punishment to provide for debarment from appointment as an auditor or internal auditor of a company, or performing a company’s valuation, for a period between six months to 10 years”,she said.

Calling this Bill as a means to boost the working environment and ease of doing business here, the Finance Minister said that Under this Act company may not commence business, unless it files a declaration within 180 days of incorporation, confirming that every subscriber to the Memorandum of the company has paid for the shares agreed to be taken by him, and also files a verification of its registered address with the RoC within 30 days of incorporation.

“ If it fails to comply with these provisions and is found not to be carrying out business, its name of the company may be removed from the Register of Companies”, she added..This Bill seeks to tighten corporate social responsibility compliance and reduce the load of cases on the National Company Law Tribunal (NCLT).

The Act requires companies to register charges on their property within 30 days of creation of charge, extendable upto 300 days with the permission of the RoC. The Bill changes the deadline to 60 days which is extendable by 60 days.Earlier while debating on the Company (Amendment) Bill 2019, the Congress lawmaker Amee Yagnik welcomed this amendment Bill and said that this would boost the economy in the country.

The AIADMK Member Navneet Krishna suggested that the CSR fund of the companies should be spent on recalibrating the water bodies while JDU member Kahkashan Parvin said that this amendment will help in ease of Doing business here to a greater extent.BJD Amar Patnayak, ADMK's G Gokulkrishananand Narendra Jadhav debated on this Bill. UNI