Government eases compliance norms under companies law

NEW DELHI: Seeking to further ease compliance requirements for corporates, the government has amended certain rules pertaining to e-voting, powers of board, and debenture issues.

The Corporate Affairs Ministry has made new amendments to rules under the Companies Act, 2013 -- whose most provisions came into force from April 1 last year.

"The amendments are very much in line with the government's focus on ease of doing business," Sai Venkateshwaran who is Partner and Head of Accounting Advisory Services at KPMG in India said.

With the amended norms, the results of the e-voting would not be announced till the entire voting process, including physical voting at the general meeting is completed.

The move has streamlined the process of e-voting and voting through ballot and other means at the general meeting. With regard to e-voting, changes have been made in the Management and Administration rules.

Besides, the Ministry has now provided flexibility to companies in obtaining their boards' approvals.

Certain matters that were previously required to be resolved only a meeting of the board can now be decided by means of a resolution through circulation as well.

Relaxations have been made with respect to various matters including approval of quarterly, half yearly and annual financial statements, buying and selling investments exceeding certain limits, inviting, accepting, renewing or amending terms of public deposits.

Relevant changes have been effected in rules related to Meetings of Board and its Powers.

"These amendments are quite welcome and provide flexibility to companies to carry on routine decision making at the board level without having to call for a board meeting," Venkateshwaran said.

The Ministry has also simplified the procedural and compliance requirements under Share Capital and Debentures rules.

Now these rules would not be applicable on commercial paper as well as Foreign Currency Convertible Bonds or Foreign Currency Bonds issued in accordance with the relevant RBI guidelines.

"These amendments also now permit that where a loan has been taken by a subsidiary company from any bank or financial institution, the charge or mortgage may also be created on the properties or assets of the holding company," Venkateshwaran said.

For the amendments, the Ministry has issued three separate notifications on March 18 and 19.

According to him, these changes are very welcome and would reduce some of the cumbersome compliance requirements and also streamline processes in other areas.