Budget Watch: Govt to push Companies Bill this term

Finance minister Pranab Mukherjee said in his budget speech that the government will introduce the long-pending Companies Bill this term, reports the Economic Times.

First discussed in the wake of the Satyam Computers fraud scandal of 2009, the bill is aimed at improving corporate governance and better protecting shareholders. 

The Bill introduces for the first time in India the concept of class action suits, which would empower investors to sue a company for "oppression and mismanagement" and claim damages, the paper said. 

It will also give permanent sanction to the Serious Fraud Investigation Office constituted to investigate the Satyam fraud.

Other provisions of the bill include the following items:

— Bill also proposes to tighten the laws for raising money from the public. There will be a single forum for approval of mergers and acquisitions, whether domestic or with foreign entities. Also, the procedure for merger of holdings and wholly-owned subsidiaries will be shortened. 

— The Bill also seeks to prohibit insider trading by company directors or key managerial personnel by treating such activities as a criminal offence. 

— The bill will also make it mandatory for listed companies to have 33 per cent independent directors and provide for formation of a One Person Company, while empowering the government to have a simpler compliance regime for small companies.