10 top facts about Companies Bill

The Rajya Sabha today passed the much-awaited Companies Bill, replacing the decades old Companies Act, 1956. The Bill had been passed by the Lok Sabha in December last year.
Here are the top 10 facts about the Bill::
1. Now that both houses of Parliament have passed the Bill, it will go to President Pranab Mukherjee for his assent before it becomes law, following which the Ministry of Corporate Affairs will issue a notification.
2. Replying to the debate on the Bill in the Rajya Sabha, Corporate Affairs Minister Sachin Pilot said the Bill seeks to bring India's corporate governance in sync with the changing business environment of the 21st century.
3. The new rules make the earmarking of funds by companies for corporate social responsibility (CSR) spending mandatory. The companies would also have to give preference to the local areas of their operation for such spending.
4. Firms having Rs. 5 crore or more profits in the last three years will have to spend on CSR activities. If companies are unable to meet CSR norms, they will have to give explanations. They may even face penalty.
5. The new legislation has more provisions to guard the interests of employees. It mandates payment of two years' salary to employees in case a company shuts operations.
6. There are provisions for annual ratification of appointment of auditors for five years, besides limiting the number of companies an auditor can serve to 20.
7. The Bill also introduces a new clause related to falsely inducing banks for obtaining credit.
8. It also makes auditors subject to criminal liability if they knowingly or recklessly omit certain information from their reports.
9. The Bill also has a provision that keeps tabs on exorbitant remunerations for the board of directors and other executives of the companies. This will protect the interest of shareholders as well as employees.
10. An important anti-fraud measure incorporated in the Bill is that it provides for prohibition on forward dealings in securities of the company by key managerial personnel.