The Companies (Amendment) Act of 2015 is a landmark law in India. It made major changes to the corporate governance framework and tried to make it easier to do business in the country. The Companies Act, 2013, was changed by the act in a number of ways that were meant to make things easier and more organized. Let’s look at the most important changes that the Companies (Amendment) Act of 2015 made and how it has helped Indian companies.
Ease of Doing Business: The act’s main goal was to make it easier for businesses to do business in India by lowering the amount of rules they had to follow. It made changes like making it easier to start a company, reducing the number of forms needed for different compliances, and requiring less information from private companies. This made setting up a business faster and easier.
- Move faster on approvals for mergers and acquisitions (M&A): One of the most important changes that the act made was to make it easier for companies to join or buy each other. It made the process easier and faster by getting rid of the need to get permission from the High Court, as long as certain conditions were met. This change cut the time and money needed for M&A deals by a lot.
- Decriminalization of Compoundable Offenses: The act made some crimes that were considered “compoundable offenses” in the Companies Act of 2013 no longer a crime. It changed the focus from harsh punishments to pushing people to follow the rules. This change has helped make the justice system less busy, made it easier to do business, and made sure that minor violations are not viewed as crimes.
- Related Party Transactions: The Companies (Amendment) Act, 2015 put in place stricter rules for transactions between related parties to improve openness and protect the interests of minority shareholders. It added new rules to stop fraud and make sure that transactions between linked parties are fair and at arm’s length.
Corporate Social Responsibility (CSR): The act changed the CSR rules, making it mandatory for companies that meet certain criteria to spend a certain portion of their profits on CSR activities. It also made clearer what CSR actions are, how they should be reported, and what the penalties are for not following the rules. This change has helped to increase business giving and social responsibility efforts.
- One Person Companies (OPCs): The act made OPCs more flexible, letting more people start companies with just one person and letting small businesses use limited liability. This change has made people more likely to start their own businesses and helped new and small businesses grow.
- Tougher rules for audits: The Companies (Amendment) Act of 2015 made auditing and accountants subject to stricter rules. It gave auditors more freedom and made them more responsible for finding fraud and other problems correctly. These changes have made financial records more clear and trustworthy.
Investor Protection: The act put in place strong protections for the interests of investors in India. It required companies to share more information and be more accountable. It also tightened the rules for public offerings and set up the National Company Law Tribunal (NCLT) and Appellate Tribunal (NCLAT) to settle corporate issues quickly and efficiently.
Overall, the Companies (Amendment) Act of 2015 has made a lot of changes to India’s company governance system. It has made processes easier to follow, cut down on the number of rules, made things more clear, and made it easier for businesses to do business. These changes have not only helped businesses grow by making the environment better for it, but they have also given investors more trust and made corporate India more open and better run.