Lok Sabha passes Companies (Amendment) Bill

01 Aug '19

2 min read

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The Lok Sabha last week passed the Companies (Amendment) Bill, 2019, which seeks to amend the Companies Act, 2013, and aims at tightening corporate social responsibility (CSR) compliance, transferring certain responsibilities to the National Company Law Tribunal and re-categorising certain offences as civil offences. It replaced an ordinance promulgated earlier.

The bill would ensure further ease of doing business for companies, finance minister Nirmala Sitharaman told the parliament lower house.

“India has become the first country to make CSR spending mandatory through a law. The companies will have one year to firm up the CSR proposal and another three years to spend funds. In case money remains unspent for one plus three years, it will have to be moved to an escrow account,’’ Indian media reports quoted the minister as saying.

“The government has so far de-registered four lakh shell companies. Also companies not spending the mandatory 2 per cent profit on CSR activities for a total period of four years will be required to deposit the amount in a special account,’’ she said.

The bill will also empower the Registrar of Companies to initiate action for the removal of the name of the company from the Register of companies if it is not carrying on any business or operation in according with the company law. (DS)

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