Government releases draft rules for new Companies Act

Moving ahead with implementation of the new Companies Act, the government today released detailed draft norms for various clauses of the new law, that replaces a nearly six decade-old legislation and overhauls the way corporates function and are regulated in the country.

Releasing the first set of draft rules, covering 16 out of total 29 chapters of the Companies Act 2013, government invited comments from the public and other stakeholders till October 8 and said the second tranche of these rules would be released next week.

The first tranche covers rules governing new norms for the board of directors, auditors, registration and incorporation of companies, revival of sick companies, financial accounts of corporates, foreign incorporated companies and National Company Law Tribunal and Appellate Tribunal, among others.

Besides, draft rules have been issued for chapters on declaration and payment of dividends, prevention of oppression and mismanagement, nidhis and miscellaneous.

The new legislation, that replaces the Companies Act, 1956, was approved by the Parliament last month.

Overhauling the rules governing companies in the country, the new Act, among others, requires corporates to spend on social welfare activities, empowers investors against any frauds committed by promoters and strives to bring in greater transparency in corporate governance matters