Industry Advocates for Revisions to Companies Bill
NEW DELHI: The Indian corporate sector is advocating for amendments to the Companies Act as the government considers further decriminalization. Industry representatives have submitted proposals to a select committee reviewing the amendment bill, emphasizing the need for greater flexibility in compliance requirements, particularly concerning auditors and the conduct of general meetings.
One key proposal suggests eliminating the requirement that at least one of three annual general meetings (AGMs) be held physically. Instead, companies would be allowed to choose between physical, virtual, or hybrid formats for these meetings, ensuring effective shareholder participation and voting rights. Industry executives argue that explicitly recognizing virtual meetings in the law would provide clarity and support the evolving corporate landscape.
Concerns have also been raised regarding provisions affecting auditors. A proposed three-year cooling-off period for auditors working with holding companies and subsidiaries has sparked criticism. Industry leaders contend that this could effectively ban non-audit work for 13 years, limiting firms’ ability to develop integrated professional capabilities. They argue that the focus should be on enhancing audit quality and independence rather than imposing capacity restrictions.
Additionally, an amendment to section 144, which prohibits auditors from providing non-audit services, has drawn scrutiny. While the government defends this measure as necessary for maintaining independence, industry representatives point out that similar restrictions do not exist in other jurisdictions. They warn that such a blanket ban could increase compliance costs and hinder international competitiveness. Concerns have also been raised about proposed changes to the disqualification of directors related to violations of related party transaction provisions.
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