Lok Sabha passes bill to amend Companies Act and promote Ease of Doing Business

The Lok Sabha has passed a bill to further amend the Companies Act, 2013 with the objective of streamlining processes and regulations in order to promote ease of doing business in India.

September 19, 2020

Specifically, the new bill will include 17 provisions to promote the ease of doing business in India

The bill will help in decriminalising penal provisions, easing the litigation burden for companies

Amendments on producer organisations in the form of a new chapter will aid production activity

Indian public companies will be able to directly list securities in select foreign markets, attracting new sources of capital and a wider investment pool

The Lok Sabha has passed a bill to further amend the Companies Act, 2013 with the objective of streamlining processes and regulations in order to promote ease of doing business in India. According to the official Press Trust of India coverage on September 19, the newly passed bill will help in decriminalising several compoundable offences and penal provisions, enabling Indian corporates to be listed overseas, and introducing legislation to support producer organisations.

Minister of Finance and Corporate Affairs of India, Nirmala Sitharaman, commented on how the bill is designed to support the needs of smaller businesses by easing the burden of legal restrictions and litigation commonly faced by them. Noting the reduction of penal provisions from 134 in 2013 to 124 as of today, the Finance Minister assured that these amendments will not increase the risk of fraudulent offences that could harm public interest.

The new bill will also include 17 provisions for promoting the ease of doing business in India, such as amendments on producer organisations with the addition of a new chapter to support farmers around the country. Additionally, the amendments will enable Indian public companies to directly list securities in select foreign markets, which will provide domestic players with additional sources of capital and help attract investments from a wider pool.

In May 2020, the Government of India introduced several reforms designed to help bolster activities in key sectors. By attracting fresh investments and creating new jobs, these initiatives boosted the country’s socio-economic strengths and capabilities across industries, empowering India and its global partners in a post-COVID-19 global economy. India has risen in ranks from the 142nd position in 2014 to 63rd  in 2019 in terms of ease of doing business, owing to the measures taken to support both new businesses and companies facing insolvency. With the help of reforms relating to easy registration of property, fast disposal of commercial disputes, and simpler tax regimes, India continues to grow as one of the easiest places to do business globally.