COMPANIES BILL: PASSED TODAY

SOME KEY FACTS YOU NEED TO KNOW ABOUT THE
BILL.

1. WHAT ARE THE KEY CHANGES?

THE LAW HAS BEEN REWRITTEN
EXTENSIVELY WITH SEVERAL NEW PROVISIONS FOR INVESTOR PROTECTION, BETTER
CORPORATE GOVERNANCE AND CORPORATE SOCIAL RESPONSIBILITY ETC. IT DEFINES
A NUMBER OF NEW TERMS THAT HAVE COME INTO VOGUE IN RECENT TIMES.

2.
WHAT ARE THE NEW CORPORATE TERMS DEFINED IN THE BILL?

The Bill
prescribes 33 new definitions. Some of these are:

Associate
Company
Small Company
Employee Stock Option
Promoter
Related
Party
Turnover
Chief Executive Officer
Chief Financial Officer
Global
Depository Receipt

3. WHAT ARE THE INVESTOR PROTECTION MEASURES?

THE
BILL PROVIDES FOR CLASS ACTION SUIT, WHICH IS KEY WEAPON FOR INDIVIDUAL
SHAREHOLDERS TO TAKE COLLECTIVE ACTION AGAINST ERRANT COMPANIES. BETTER
DISCLOSURE REQUIREMENTS IN FINANCIAL STATEMENTS AND DISCLOSURE OF
INTERESTS OF DIRECTORS ETC. IT HAS ALSO STREAMLINED PROCEDURES RELATING
TO DISCLOSURE OF TRANSACTIONS WITH PARTIES RELATED TO DIRECTORS,
PROMOTERS ETC.

4. WHAT ARE THE ANTI-FRAUD MEASURES?

IT PROVIDES FOR
PROHIBITION ON FORWARD DEALINGS IN SECURITIES OF COMPANY BY KEY
MANAGERIAL PERSONNEL, INSIDER TRADING RULES AND RESTRICTION ON NON-CASH
TRANSACTIONS INVOLVING DIRECTORS.

5. HOW DOES IT HELP EASE OF DOING
BUSINESS?

IT PROVIDES FOR NEW CONCEPTS SUCH AS A SINGLE PERSON COMPANY.
CAP ON NUMBER OF PERSONS IN A PRIVATE COMPANY RAISED TO 200. E-VOTING
HAS BEEN RECOGNIZED.

6. WHAT HAPPENS NEXT AFTER RAJYA SABHA PASSES
?

THE BILL GOES FOR PRESIDENTIAL ASSENT. THE DRAFT RULES ON THE
COMPANIES ACT WILL THEN BE MADE PUBLIC AND THE ACT COMES INTO EFFECT
WITH NOTIFICATION BY MINISTRY OF CORPORATE AFFAIRS.