| Log in

India finally updates 1950s company laws

08 August, 2013

India ratified its first major overhaul of company law in more than 50 years on Thursday, seeking to strengthen accounting standards and shareholder rights in a country where many businesses are family-controlled.

Parliament approved the new bill, which has provisions that allow shareholder class action lawsuits and require companies with market capitalisation of more than 5 billion rupees to spend 2 percent of their annual net profits on corporate social responsibility, such as social work or charity.

The new bill replaces companies legislation enacted in 1956, long before reforms in the 1990s opened up the economy and laid the foundations for a boom in privately-operated companies.

“This was a long time coming. The new law brings our corporate law closer to global standards and would definitely go a long way in improving how business is done,” said Dinesh Kanabar, deputy CEO of KPMG in India.

The legislation is part of an ambitious agenda for the current session of parliament that includes a $22 billion cheap food plan that will be a central plank of the Congress party’s platform in elections due by May.

The companies bill, which will replace legislation that has often been criticised for being outdated and cumbersome, had been in the works for at least a decade but gained momentum after an accounting scandal at Satyam Computer Services in 2009.

India ranks 139th globally in the World Bank’s ease of doing business report, behind smaller economies such as Zambia.

President Pranab Mukherjee is expected to sign the bill into law.


Leave Your Comment
Key highlights from the new Companies Bill

Key highlights from the new Companies Bill

TEAM VCC 4 years ago
The upper house of the Parliament passed the Companies Bill on Thursday after...
Top 50 Key highlights of the Companies Bill 2012

Top 50 Key highlights of the Companies Bill 2012

The promulgation of the new Act is a step towards globalization and is a...
New Companies Act facilitates a framework for corporate governance

New Companies Act facilitates a framework for corporate governance

MUKESH BUTANI 4 years ago
The new Companies Act is modelled after modern laws given that the extant law...
No Comments

India finally updates 1950s company laws

Powered by WordPress.com VIP