Companies Act 2013 Current Affairs - 2020

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Cabinet Approval: To amend Companies Act, 2013

On March 4, 2020, the Union Cabinet approved 72 changes to the Companies Act, 2013. The main aim of the amendment is to decriminalize the provisions in the act.

Highlights

The amendment aims to recategorize 23 offences and omit 7 compoundable offences. Under the amendment, the companies with Corporate Social Responsibility (CSR) obligation of less than Rs 50 lakhs need not constitute a CSR committee.

What is CSR?

The CSR is a concept through which a company takes volunteer efforts in philanthropical programmes and adopt businesses that benefit society. The Injeti Srinivas Committee was constituted to review existing frameworks of CSR and strengthen its ecosystem.

Section 129 A introduced

The act is to be amended to make filings more scientific. A new Section 129 A is to be included that will file results of unlisted companies (under the act) on a periodic basis. This is to be done in additional to annual filing.

Benefits

The amendments will help increase investments, especially foreign investments. This is mainly because, the amendment is to allow domestic firms to list on foreign exchanges. At present, Indian Companies have the option of GDR (Global Depository Receipt) and ADR (American Depository Receipt) alone.

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National Financial Reporting Authority submits first report since constitution

The National Financial Reporting Authority (NFRA) issued its first audit report of IL&FS Financial Services Limited for the year 2017-18. It is the first report submitted by the authority since its constitution in October 2018. The audit was conducted abiding Section 13(2) of the companies act, 2013 and NFRA rules, 2018.

Highlights

Prior to NHRA, the audit of the IL and FS financial services were conducted by Deloitte Haskins and Sells (DHS). NHRA reports that the audit conducted by DHS was inadequate.

IL and FS crisis

IL and FS is a non-banking financial company that was established 30 years ago in order to conglomerate funds for infrastructure projects in India. The company fell short of cash recently and faced cash over runs, delays in land acquisition and approvals in 2018.

National Financial Reporting Authority

National Financial Reporting Authority was established in 2018 under the Companies act, 2013. Due to the establishment of NFRA, India is now eligible for membership of International Forum of Independent Audit Regulators. It is a global member organization that includes regulators from 53 jurisdictions. It was established in 2006 at Paris. It works to enhance investor protection by improving auditing globally.

Companies act, 2013

The powers and function of NFRA is listed under Section 13(2) of companies Act, 2013.

Under Section 13 (2) of the Companies act, 2013, the NFRA is responsible to audit policies and standards in the country, impose sanctions against defaulting auditors, audit firms and their monetary penalties. It is also responsible to audit companies that are listed in stock exchanges and those that function outside India.

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