Cabinet gives nod to new Companies Bill

The Cabinet on Thursday approved the Companies Bill 2011 which, once approved by Parliament, will replace the half-a-century-old Act.

"The Cabinet has cleared Companies Bill, 2011. It islikely to be tabled (for consideration and passage) in the ongoing WinterSession," a Corporate Affairs Ministry official said after the Cabinetmeeting.

The Bill, which has already been vetted by the ParliamentaryStanding Committee of Finance and also by different ministries, seeks to updatethe company law in line with the best global practices.

The Bill has introduced ideas like Corporate SocialResponsibility (CSR), class action suits and a fixed term for independentdirectors.

Among other things, it also proposes to tighten laws forraising money from the public. The Bill also seeks to prohibit any insidertrading by company directors or key managerial personnel by treating suchactivities as a criminal offence.

Further, it has proposed that companies should earmark 2 percent of the average profit of the preceding three years for CSR activities andmake a disclosure to shareholders about the policy adopted in the process.