04 January 2013
After nearly two decades of efforts to revamp the exiting Companies Act 1956, the Companies Bill 2011 aimed to give a modern legislation for growth and regulation of corporate sector was approved with certain modifications. The Bill gives a clearer direction to the role of auditor, corporate social responsibility, inter-corporate loans and makes whole-time directors more accountable and defines private placements, among others.
Once the Bill becomes a law, corporates will be expected to give valid reasons if they are not spending the amount earmarked for CSR activities. However, the Bill does not make it mandatory.
What may seem relevant today, the Bill has modified provisions for audit of Government companies by Comptroller and Auditor General of India (C&AG). The modification has been made to enable C&AG perform such audit more effectively.
The provisions relating to restrictions on non-audit services have been modified in the Bill to ensure that such restrictions shall not apply to associate companies. It also gives a transitional period for complying with such provisions.
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