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Cabinet clears promulgating fresh ordinance for companies law amendments
The Union Cabinet Tuesday approved promulgating an ordinance for companies law amendments to plug gaps in corporate governance and enforcement framework as well as improve the ease of doing business.
A bill to replace the Companies (Amendment) Ordinance, 2018, that was promulgated in November could not be passed during the last session of the current Parliament.
Hence, the government has decided to promulgate the Companies (Second Amendment) Ordinance, 2019.
"The amendments have been brought in to address the need to impose civil liability for technical and procedural defaults of a minor nature," the government said.
Further, the changes have been made to plug gaps in the corporate governance and enforcement framework covering a wide range of issues.
As many as 16 minor offences have been re-categorised as "purely civil defaults" which would help de-clog special courts.
Besides, certain routine functions from the National Company Law Tribunal (NCLT) would be transferred to the central government. These include dealing with applications for change of financial year and conversion from public to private companies.
According to an official tweet, under the amended law, non-maintenance of registered office and non-reporting of commencement of business would be grounds for striking off the name of a company from the register.
Among others, breach of ceiling on directorships would be a ground for disqualification of a director.
There would also be stringent provisions with reduced timelines for creation and modification of charges under the companies law, according to the tweet.
The amendments are aimed at filling critical gaps in the corporate governance and compliance framework as well as simultaneously extend "greater ease of doing business to law-abiding corporates", it added.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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