Bill provisions easy cancellation of company registrationIf amendments made to the existing Companies Act are endorsed, firms can allocate more funds for donation, easily cancel registration, and conduct annual general meetings remotely using video-conference technology.
If amendments made to the existing Companies Act are endorsed, firms can allocate more funds for donation, easily cancel registration, and conduct annual general meetings remotely using video-conference technology.
These amendments were proposed by Industry Minister Nabindra Raj Joshi during a meeting with parliamentarians on Friday.
As per the Companies (Amended) Bill 2016, a special provision has been introduced for defunct companies to cancel registration. A company, showing reasons for its failure to operate the business, can cancel registration by paying 1 percent of paid-up capital, or a prescribed fee, whichever is lower, within a year.
The draft bill has made it mandatory for company promoters to be present at annual general meetings (AGMs). However, in the event of their failure to be present, they can cast their votes remotely through video-conferencing.
As per the draft bill, like public companies, stakeholders of private companies can also knock the court’s door, or the Office of the Company Registrar, if the company fails to call the annual general meeting.
As the existing Act has provisioned that every public company have a board of directors consisting of a minimum of three and a maximum of 11 directors, the amended bill has also introduced a similar provision, under which a private company should have a board of directors consisting of a maximum 11 directors.
The bill has also raised ceiling on donation or gift in a sum that a company can provide in a financial year. As per the amended draft, a company can extend up to Rs100,000 in donation or gift, up from Rs50,000 at present. The bill has added a new provision under which an inspector deputed for the inspection of a company is barred from being associated with that company’s business.
Likewise, a company having a paid-up capital of Rs100 million or more should have a three-member audit committee. Under the existing Act, a company with a paid up capital of Rs30 million or more shall have a three-member audit committee. The draft bill has also barred companies from spending more than 25 percent of its total expenditure on administration.
Also, no shareholder of a holding company and officer should extend loan or provide any financial assistance to their close relatives, says the draft. They are not allowed to act as a guarantor or provide security in respect of any credit borrowed by their close relatives.