New Delhi: The proposed changes to companies law that were cleared by the Lok Sabha Wednesday would provide relief to corporates and improve ease of doing business in India, according to experts.
The Lok Sabha today passed the Companies Act (Amendment) Bill, 2014, which seeks to make 14 amendments, including those pertaining to related party transactions and punishment for illegal money pooling activities.
The amendments "come as a great relief to corporates as they go about implementing the new law and gear up for the first year of reporting under new law", Sai Venkateshwaran, India Head (Accounting Advisory Services), KPMG in India said in a statement today.
Corporate Affairs Minister Arun Jaitley said the "oppressive provisions" have been removed from the Companies Act 2013 as it was felt "no body will come here to set up business if such an environment persists."
Most provisions of the new Companies Act came into force from April 1 but some of it had faced criticism from various quarters.
Venkateshwaran said that within nine months of operationalising most provisions of the Companies Act, 2013, the amendments approved by the Lok Sabha are primarily aimed at improving the ease of doing business in the country.
"The amendments approved by the Lok Sabha to the related party transaction provisions of Companies Act, 2013 would improve the ease of doing business in India, especially for small and medium enterprises.
"It would also remove some of the compliance challenges faced by companies," Rajendra Nayak, Tax Partner, EY India said in a separate statement.
According to Venkateshwaran, one of the amendments seeks to bring in specific punishment for entities taking public deposits in violation of companies law.
Nayak noted that the new companies law had sought to strengthen the regulatory framework for related party transactions by stipulating stringent approval and reporting requirements.
"However, some of these requirements were seen as being unduly onerous and had resulted in a disproportionate compliance burden for companies," he added.
Venkateshwaran further said there are still some areas where corporates continue to have concerns and hoped that a more comprehensive post implementation review of the Act will be undertaken to address these other issues.
