Lok Sabha Question No. 127 (STARRED), answered on 2016-03-04
Subject: Ease of Doing Business
Ministry: CORPORATE AFFAIRS
Asked by: DHARMENDRA YADAV, SHIVAJI ADHALRAO PATIL

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

STARRED QUESTION NO. 127 ANSWERED ON FRIDAY, THE 04 th  MARCH, 2016/ PHALGUNA 14, 1937 (SAKA)

## EASE OF DOING BUSINESS

## QUESTION

- *127.  SHRI DHARMENDRA YADAV:

## SHRI ADHALRAO PATIL SHIVAJIRAO:

Will the Minister of CORPORATE AFFAIRS कारपोरेट कार्य मं त्री be pleased to state:

- (a) whether the Government is considering to amend the Companies Act so as to make doing business easier and if so, the details thereof;
- (b) whether the Government has also announced Central Registration Centre  (CRS)  and  Government  Process  Re-engineering  (GPR)  for ensuring  faster  clearances  to  incorporate  companies  and  if  so,  the details thereof;
- (c) whether the Government has appointed a panel to suggest the amendments  for  improving  the  ease  of  doing  business,  if  so,  the details  thereof  and  the  major  suggestions  made  by  the  aforesaid panel along with the action taken by the Government thereon;
- (d) whether  the  Government  has  decided  to  launch  a  public consultation process on the suggested changes and if so, the details thereof; and
- (e) the other steps taken by the Government to improve the ease of doing business in the country?

## ANSWER

THE MINISTER OF CORPORATE AFFAIRS                         (SHRI ARUN JAITLEY)

कारपोरेट कार्य मंत्री (

श्री अरुण जेटली

- (a) to (e):- A statement is laid on the Table of the House.

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)

## STATEMENT  REFERRED  TO  IN  ANSWER  TO  LOK  SABHA  STARRED DOING

QUESTION NO. 127 FOR 04.03.2016 REGARDING  EASE OF BUSINESS. (a)  to  (e):-  Yes,  Madam.  Government  had  constituted  the  Companies  Law Committee (CLC) to, inter-alia, look into issues arising from the implementation of Companies Act, 2013 (the Act).  CLC has submitted its report on 1st February, 2016. The  CLC  has  suggested  amendments  to  around  78  Sections,  not  including consequential amendments in other sections, of the Act.   In addition to resolving other issues faced by stakeholders, the suggested amendments focus on making it easier to do business in the Country. In preparing its Report, the CLC had invited suggestions from public and held broad based consultations with experts and stakeholders before giving its recommendations. The CLC's Report is available on the website of the Ministry. Ten key recommendations of the CLC are at Annexure I. On receipt of the CLC report, Government had invited public comments. Around 1200 comments were received, mostly supporting the proposed changes in the Act. A number of comments were repetition of the earlier suggestions received and considered by the CLC.  The comments were considered by the Government while finalising  its  views  on  accepting  the  recommendations  of  the  CLC.  As  per requirements, inter-ministerial consultation has to be completed before any further action. The Ministry of Corporate Affairs has established a Central Registration Centre (CRC) for faster processing of applications for availability of names, which would subsequently be extended  to incorporation of Companies  after necessary modifications in the MCA21 system. To  facilitate  ease  of  doing  business,  the  Ministry  of  Corporate  Affairs  has introduced  an  integrated  INC-29  form  for  incorporation  of  companies,  omitted requirement  for  minimum  paid  up  capital,  made  mandatory  common  seal  for companies  optional  and  done  away  with  filing  for  commencement  of  business. Other  departments  have  also  taken  steps  with  emphasis  on  simplification  of existing rules and procedures and use of information technology for ease of doing business and to make governance more effective and efficient.

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ANNEXURE REFERRED TO IN THE REPLY TO LOK SABHA STARRED QUESTION NO. 127

## 10 OF THE KEY RECOMMENDATIONS OF THE COMPANIES LAW COMMITTEE

1. Simplification of the private placement process [section 42].
2. Incorporation process to be made easier by allowing unrestricted object clause in the Memorandum of Association dispensing with detailed listing of  objects,  self-declarations  to  replace  affidavits  from  subscribers  to memorandum and first directors [sections 4 and 7].
3. Provisions relating to forward dealing and insider trading to be omitted from  Companies  Act  as  these  are  covered  under  SEBI  regulations [sections 194 and 195].
4. Companies  may  give  loans  to  certain  entities  in  which  directors  are interested  after  passing  special  resolution  and  adhering  to  disclosure requirement [section 185].
5. Amendment of definitions of associate company and subsidiary company to  ensure  that  'equity  share  capital'  is  the  basis  for  deciding  holdingsubsidiary  relationship  rather  than  'both  equity  and  preference  share capital' [section 2].
6. Restriction  on  layers  of  subsidiaries  and  investment  companies  to  be removed [sections 2(87) and 186(1)].
7. Requirement of approval of Central Government for Managerial remuneration to be exercised by shareholders through a special resolution [sections 196 and 197].
8. Change in the definition of term 'relative' for determining disqualification of auditor [section 141].
9. Test  of  materiality  to  be  introduced  for  pecuniary  interest  for  testing independence of ID [section 149].
10. Frauds less than Rs. 10 Lakh to be compoundable offences [Section 447].

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