New Delhi: The Union Cabinet on Thursday cleared the Companies Bill, 2011 and decided to take up the Bill in the Winter Session itself for approval by Parliament.
Once approved by Parliament, it will replace half-a-century-old Companies Act.
"The Cabinet has cleared Companies Bill, 2011. It is likely to be tabled (for consideration and passage) in the ongoing Winter Session," a Corporate Affairs Ministry official said after the Cabinet meeting.
The Bill, which has already been vetted by the Parliamentary Standing Committee of Finance and also by different ministries, seeks to update the company law in line with the best global practices.
The Bill has introduced ideas like Corporate Social Responsibility (CSR), class action suits and a fixed term for independent directors.
Among other things, it also proposes to tighten laws for raising money from the public. The Bill also seeks to prohibit any insider trading by company directors or key managerial personnel by treating such activities as a criminal offence.
Further, it has proposed that companies should earmark 2 per cent of the average profit of the preceding three years for CSR activities and make a disclosure to shareholders about the policy adopted in the process.
The Bill, which was originally introduced in Lok Sabha in 2008, lapsed because of change of government. It was reintroduced in August 2009.
Cabinet approval on the Companies Bill, 2009, was pending as the Finance Ministry and MCA failed to reach a common ground on powers to be delegated to the Securities and Exchanges Board of India (SEBI) in case of regulatory overlaps.
Finance Minister Pranab Mukherjee, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Corporate Affairs Minister Veerappa Moily were asked to discuss and iron out issues. The ministers have come to a consensus on the issue, sources in the know said.
According to them, the Finance Ministry and SEBI have sought review of the provisions which conflicted with the SEBI Act. Apparently, it has been decided that SEBI's view will be upheld in cases where jurisdictions conflict.
(With additional information from PTI)