Finally, new company law legislation to replace the existing companies act 1956, "Companies Act 2013" is a reality with the assent of the President on 29th Aug, 2013. The Indian Inc., and the professional community have been waiting for this legislation for over a decade. The Government is likely to post draft rules for public debate in next couple of weeks after which the rules will be notified. The new legislation has rationalized a lot of provisions and introduced novel concepts in sync with the evolving businesses and its needs, technological advancements and globalization, just to name a few:
One Person Company (OPC) - a new vehicle for individuals carrying on business with limited liability.
Corporate Social Responsibility (CSR) - 2% of average net profits of last 3 years to be mandatorily spent on CSR by certain companies.
Mandatory audit rotation for listed and prescribed classes of companies.
Resident Director - At least 1 director of a company shall be a person who has stayed in India for 182 days or more in the previous calendar year.
Women Director - Listed and prescribed class of companies to have at least 1 woman director.
Secretarial audit mandatory for listed and prescribed classes of companies.
Restriction placed on multi-layer investment subsidiaries
Class action suits - Provisions relating class action suits introduced
Exit options for minority holders on reorganization.
National Company Law Tribunal (NCLT) – replaces the High Court with a Tribunal to be known as NCLT to exercise and discharge the powers and functions conferred including approval of merger, corporate reorganization, capital reduction, extension of financial year etc.
Fast track restructuring without taking NCLT approval.
Cross border mergers allowed between a Indian company and a foreign company.
As the new act proposed radical changes, it is suggested that it is made effective from 1st April 2014 and shall provide enough time for transition and to comply with the new provisions. Introduction of MCA 21 revolutionized the technology infrastructure of Ministry of Corporate Affairs for regulation, and compliance by the corporate and has immensely benefited various stakeholders. Hopefully with the best of the technology, new legislation and holistic implementation will help India to improve it’s ranking in ease of doing business globally and aid in attracting more global businesses and investments.
I had an opportunity to hear Mr Harry M Jansen Kraemer Jr (Author – From Values to Action & Prof at Kellogg School of Management), he talked about four principles of value-based leadership, extensively deliberated in this book, which encapsulates what is expected of a leader in the current times and deeply motivating:
Self-reflection – the ability to reflect and identify what you stand for, what your values are and what matters most.
Balance and perspective – the ability to see situations from multiple perspectives, incl different viewpoints, to gain a holistic understanding.
True self-confidence – more than mastery of certain skills, true self-confidence enables you to accept yourself as you are, recognizing your strengths and your weaknesses, and focusing on continuous improvement.
Genuine Humility – the ability to never forget to who you are, to appreciate the value of each person in the organization, and to treat everyone respectfully.