Company Law Committee Report (2022)

Report of The Company Law Committee (2022) recommends various changes to the Companies Act, 2013 to recognize new concepts, expedite corporate processes, improve compliance requirements, and remove ambiguities from existing provisions.
The Report also includes recommendations to enable producer organization to incorporate under the Limited Liability Partnership Act,2008.

1. This Report is in pursuance and continuation of the avowed objective of the Central Government to promote greater ease of doing business for law-abiding corporates in the country. During its detailed discussions and analysis, the Committee also sought to streamline the operation of certain provisions of the Companies Act, 2013 through clarificatory amendments and other drafting changes.

2. The Report proposes amendments to bring Indian company law in tune with globally recognised best practices and improve ease of living for corporates and stakeholders.
3. The main recommendations of the Committee regarding the Companies Act, 2013, as included in Chapter I of the Report, are as follows:

• Allowing certain companies to revert to the financial year followed in India;
• Facilitating certain companies to communicate with their members in only electronic form;
• Recognising issuance and holding of fractional shares, Restricted Stock Units and Stock Appreciation Rights;
• Easing the requirement of raising capital in distressed companies;
• Replacing the requirement of furnishing affidavits with the filing of self certification/ declaration;
• Clarifying the inclusion of ‘free reserves’ while determining the limit for buying back of a company’s equity shares;
• Prohibiting companies from recording trusts on their register of members;
• Allowing companies to hold general meetings in virtual, physical or hybrid modes;
• Creating an electronic platform for maintenance of statutory registers by companies;
• Clarifying provisions relating to Investor Education and Protection Fund;
• Strengthening the National Financial Reporting Authority;
• Reviewing and strengthening the audit framework and introducing mechanisms to ensure the independence of auditors;
• Standardising the manner for auditors to provide qualifications;
• Recognising and providing an enabling framework for the constitution of Risk Management Committees;
• Clarifying the tenure of independent directors;
• Revising provisions relating to the disqualification and vacation of the office of directors;
• Clarifying the procedure for the resignation of key managerial personnel;
• Strengthening the provisions relating to mergers and amalgamations;
• Easing the restoration of struck off companies by enabling the Regional Director to allow restoration of names of companies in certain instances;
• Recognising Special Purpose Acquisition Companies and allowing such companies, which are incorporated in India, to list on permitted exchanges;
• Prohibiting the conversion of co-operative societies into a company;
• Modernising enforcement and adjudication activities through electronic mode;
• Strengthening the incorporation and governance framework for Nidhis;
• Removing ambiguities from present provisions under the Companies Act, 2013 through changes of drafting & consequential nature.

4. In addition to the above, Chapter II of the Report recommends enabling the incorporation of Producer Limited Liability Partnerships under the Limited Liability Partnership Act, 2008 to ease incorporation and compliance requirements for producer organisations.
5. It is just the recommendations made by the Committee which will further give a fillip to honest, law-abiding corporate and other stakeholders in the country whilst consolidating and strengthening the provisions of the Companies Act, 2013 and the Limited Liability Partnership Act, 2008.

For further detailed report please click :-
https://www.mca.gov.in/bin/dms/getdocument?mds=bwsK%252FBEAFTVdpdKuv5IR5w%253
D%253D&type=open.