Kamal Ghorui
NEW DELHI: Finance and corporate affairs minister Nirmala Sitharaman on Monday introduced fresh amendments to the Companies Act, which seeks to decriminalise several procedural defaults, provide flexibility in buyback of shares and recognise new instruments for executive compensation.The bill, which has been referred to a joint Parliamentary committee for examination, provides for allowing restricted stock units and stock appreciation rights, in addition to Employee Stock Option Plans (ESOPs), with approval of shareholders. Stock appreciation rights can help employees get cash equivalents in case stock prices rise.Govt has also proposed setting up special benches of the National Company Law Tribunal to deal with cases under the Companies Act and the Insolvency & Bankruptcy Code. Further, simplification of procedures relating to mergers and amalgamations through rationalisation of approval thresholds for fast-track mergers has been suggested.On buybacks, the rules are proposed to be changed once Parliament approves the amendments to the law to allow certain companies, especially those that are debt free, to make up to two offers within a year, with the second one to be undertaken six months after the closure of the first buyback.There are several provisions of the Limited Liability Partnership Act, relating to procedural lapses that are sought to be decriminalised. Similarly in the case of the Companies Act, some of the offences related to issue of prospectus, buyback, AGM, minor violations on maintenance of accounts, certain offences of directors, among others are also proposed to be decriminalised.Relaxation for small companies from some CSR requirements is part of the amendments moved by FM. The net profit criteria is sought to be raised to Rs 10 crore and the number of days for transferring the unspent CSR funds to a separate account is being increased from 30 days to 90 days.Revised eligibility threshold for the constitution of CSR committees by companies has also been proposed. The bill has clarified that compromise or arrangements under the Companies Act will not be permitted where liquidation has begun under IBC.“From an audit and assurance standpoint, the amendments mark a clear shift toward stronger regulatory oversight, driven by enhanced powers of NFRA, including wider disciplinary mechanisms and more streamlined inquiry and penalty processes,” said Amit Maheshwari, managing partner at consulting firm AKM Global.
