Wednesday, September 11, 2013

Recent Bills- Part 1

Companies Bill 2012

The Companies Bill was laid before the Parliament in the month of December 2011 and was referred to the Parliamentary Standing Committee on Finance, headed by Mr. Yeshwant Sinha. The standing Committee submitted its report in June, 2012. Based on Standing Committee recommendations, the Companies Bill was amended and was introduced as Companies Bill 2012. The Bill was passed in Lok Sabha on 18 December 2012 and by Rajya Sabha on 8 August 2013.
The Bill has 470 clauses are against 658 Sections in the existing Companies Act, 1956. The entire bill has been divided into 29 chapters.

Key Features:
  • Companies are required to spend at least two per cent of their net profit on Corporate Social Responsibility
  • The limit in respect of maximum number of companies in which a person may be appointed as auditor has been proposed as 20, from which public companies should not be more than 10
  •  Financial Year of any company can end only on March 31 and only exception is for companies, which are holding/subsidiary of a foreign entity requiring consolidation outside India, can have a different financial year with the approval of Tribunal
  • Maximum number of members in a private company increased from 50 to 200
  • For infrastructural projects, preference shares can be issued for a period exceeding 20 years
  • Shares cannot be issued at a discount except sweat equity shares
  • Time gap between 2 buy-backs shall be minimum 1 year
  • One of the directors of a company shall be a person who has stayed in India for 182 days or more
  • A Chairperson can be an MD or CEO at the same time, if the Articles of the company permits or if the company does not have multiple businesses or where the company has multiple businesses and has appointed 1 or more CEO for each such business
  • CFO and WTD(Whole Time Director) included in Key Managerial Personnel
  • Appointment of at least one woman director on the board of prescribed classes of companies has been made mandatory

Source: Ministry of Corporate Affairs, Government of India.

The National Food Security Bill 2013

In its 2009 national election manifesto, the Congress had promised to enact a Right to Food law with the aim of guaranteeing access to sufficient food for all people. On March 19 2013India’s Cabinet approves an amended draft of the food security before introducing it in Parliament for a general debate. On May 2, 2013India’s government introduces an amended food security bill in Lok Sabha. On August 26 2013 the bill was passed in the Lok Sabha with a simple majority. The Bill was passed by Rajya Sabha on 2 September 2013, bringing it one step closure to being an Act.

Key Features:
  • 75% of rural and 50%  of the urban population entitled to five kg food grains per month at Rs.3, Rs.2, Re.1 per kg for rice, wheat and coarse grains, respectively
  • The bill giveslegal entitlement to 67 per cent population (including 75 per cent rural and 50 per cent urban) for subsidized grains under the Targeted Public Distribution System
  • The work of identification of eligible households has been left to the states
  • Pregnant women and lactating mothers entitled to nutritious meals and maternity benefit of at least Rs.6000 for six months
  • The central government will provide funds to states in case of short supply of food grain
  • The current food grain allocation of the states will be protected by the central government
  • The state governments will provide food security allowance to the beneficiaries in case of non-supply of food grain
  • The eldest woman in the household, 18 years or above will be the head of the household for the issue of the ration
  • There will be state and district level redress mechanisms
  • The programme , when implemented, will be the biggest in the world with the government spending estimated at Rs 125,000 crore annually on supply of about 62 million tonns of rice, wheat and coarse cereals to 67 per cent of the population

Source: The hindu.

By, Varad Shastri
SIMSREE Finance Forum