The Lok Sabha on Wednesday approved the Companies Act (Amendment) Bill, 2014, which seeks to remove "oppressive provisions" in Companies law and to align it with international practices, with the government saying it will improve ease of doing business and attract investments.
Finance Minister Arun Jaitley, piloting the Bill, 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."
The Amendment Bill was passed by voice vote but not before opposition Congress created uproar as it wanted the legislation to be referred to the Standing Committee, a demand that was not accepted by the Chair.
Congress leader Mallikarjun Kharge said the government in "its hurry", was doing away with the traditional practice of referring important Bills to a Parliamentary committee.
While winding up the debate Jaitley said, the amendments will do away with draconian POTA (Prevention of Terrorism Act)-type provisions which had made it impossible for an accused for violating provisions of Companies Act to get bail.
"We are easing the environment for doing business," the Finance Minister said while justifying the amendments to the Companies Act.
Observing that some of the provisions in Companies Act had made doing business in the country extremely difficult, Jaitley said, the amendments sought to remove them as they crept in because of oversight.
"There were some (provisions) which was oversight and there were some which were left out and there were some which came in as part of this thinking that we must make doing business extremely difficult," the minister said.
The 14 amendments to the Companies Act include severe punishment for those raising illegal deposits from the public, a move that comes in the backdrop of Saradha scam in which those running chit funds duped lakhs of small investors.
To address concerns raised by the corporates, the government has also agreed to relax a number of norms including those pertaining to related-party transactions, while resolutions passed by the companies' boards would not be subjected to public inspection.
The new Companies Act came into force with effect from April 1 with some provisions yet to become operational. Many of the provisions have evoked strong criticism.
To improve ease of doing business, the proposed amendments include omitting requirement for minimum paid up share capital, and consequential changes and making common seal optional, and consequential changes for authorisation for execution of documents.
Besides, specific punishment will be prescribed for non-compliance to norms governing deposits taking activities.
Such a provision was "left out in the (existing) Act inadvertently".
None of the amendments has any "ulterior motive", Jaitley said, adding that allowing these provisions to continue would "disrupt" the investment environment of the country.
The 14 proposed amendments include provision to ensure that frauds beyond a certain threshold would need to be mandatorily reported by the auditors to the government.
This would be among the first major initiatives by the government to make changes in India's regulatory framework to improve its global ranking for ease of doing business, where the country has been ranked very low at 142nd position in the latest World Bank report.
Insisting that the Bill be referred to the Standing Committee, Kharge said this has been the practice. The former Union Minister cited the case of a labour ministry Bill in which just a word "workmen" was to be replaced with "workers" and it had to be referred to the Standing Committee.
"That Bill is still pending with the Standing Committee," Kharge said, adding he could cite innumerable such instances.
The former minister questioned whether the government ignored Congress just because its strength is too low in the House. Congress has 44 members in the 545-member Lower House.
Jyotiraditya Scindia, another Congress member, wanted to know if government was doing away with the process of Business Advisory Committee and the Standing Committee.
Members from Trinamool Congress, CPI-M, JD-U and RSP too demanded that the Bill be referred to the Standing Committee.