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Companies Bill To Introduce New Concepts
Although the Companies Bill is still to be approved by the Upper House of Parliament and the President, it is looking likely it will be published. This Bill is an interesting blend of forward looking measures, enhanced responsibilities on gatekeepers of law and plugging loopholes in current legislation. Given the recent corporate scandals there is a heightened focus on corporate governance and transparency in various areas.
Several new concepts have been introduced in this Bill, such as:
Class action suits
Currently the basic concept of a class action lawsuit is captured to an extent in corporate laws. The Companies Bill now provides for recognition of class action lawsuits as part of "oppression and mismanagement" provisions, and lays down an enabling framework.
Dispute resolution framework
Currently corporate law matters are dealt by numerous judicial / quasi-judicial forums such as the District Court, the High Court etc. With a view to streamline the process, the dispute resolution framework will be a single forum with subject matter experts, with only NCLT and NCALT administering corporate cases.
Corporate social responsibility
Currently CSR is an optional choice for corporations. With the introduction of the Companies Bill India will be the first company to include CSR in corporate laws and enforce it as mandatory.
The Companies Bill is much debated legislation as it will introduce both positive and, some might say, negative implications for corporations. The Bill will make substantial changes in the restructuring provisions with greater focus on disclosures and compliances. If introduced, the Bill will likely be published in late 2013, with further rules and grandfathering provisions if necessary.