21 March, 2014
NEW DELHI: The Election Commission of India (ECI) has given its go ahead to the corporate affairs ministry to release the final rules governing the Companies Act, 2013, which became operational from April 1, 2014. The ministry will now release the rules next week.
Election Commission's nod was required as the model code of conduct is in force after the general elections were announced on March 5. "The Election Commission has no objection giving powers to the MCA to release the rules of the new Act," a senior ministry official told ET. The new companies law is spread across 29 chapters, seven schedules and 470 sections.
The ministry has already notified 98 sections of the new legislation along with the rules governing the corporate social responsibility (CSR) spending, which will make it mandatory for a certain class of companies to spend 2% of their average net profit of last three years on social welfare activities.
India Inc, however, is not too happy with the ministry's decision to release the rules in the last week of the financial year, which will give companies hardly any time to comply with the norms. "The ministry needs to go the SEBI way and give us at least a quarter to understand the intent of the rules," said a senior company executive on anonymity.
Market regulator SEBI, in its press release after its board meet last year, had said that their regulation aligning with the new companies law will be operational from October 1, 2014.
Sources in the ministry indicate that all the rules except ones related to National Company Law Tribunal (NCLT) and National Financial Reporting Authority (NFRA) will be held over, as both the subjects require more consultations.
Moreover, the Madras Bar Association has challenged the constitution of NCLT in Supreme Court.