The Union Cabinet, on Thursday, approved amendments to the Companies Bill, 2011, which not only aim to serve the interests of the stakeholders better but also mentions changes related to spending on corporate social responsibility activities.
The revised Bill, which is expected to be introduced in the winter session of Parliament, has limited the number of companies an auditor can serve to 20. It has also brought in more clarity on criminal liability of auditors. Appointment of auditors for five years shall be subject to ratification by members at every annual general meeting.
In view of the various reformatory provisions proposed in the Companies Bill, 2011, together with omission of existing unwanted compliance requirements, companies will now be able to comply with the requirements of the proposed Companies Act in a more effective manner.
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The highlights of the Bill include amendment to Clause 36 (c) to help in curbing corporate delinquency. It would also include punishment for falsely inducing a person to enter into any agreement with bank or financial institution, with a view to obtaining credit facilities. Provisions relating to audit of government companies by the Comptroller and Auditor General of India (CAG) modified to enable CAG to perform such audit more effectively. Clause 186 has been amended to provide that the rate of interest on inter corporate loans will be the prevailing rate of interest on dated government securities.