Quicker mergers, e-docs in changes to Companies Act

The government is moving to amend the Companies Act, targeting a legislative push in the winter session of Parliament to make the law more businessand digital-friendly, two people aware of the discussions said.

- Gireesh Chandra Prasad

Likely changes include a key proposal to speed up certain mergers, facilitate electronic document serving and e-adjudication of offences, and enable administrative restoration of companies struck off from the register without involvement of tribunals, said one of the persons quoted above. The measures aim to help Indian companies turn globally competitive and elevate the country's ranking in future editions of the World Bank's Business-Ready index. One of the proposals is to rework the shareholder voting parameters to enable faster clearance for mergers among startups, unlisted companies and a corporate parent and its wholly-owned subsidiaries. The idea is to ease the current requirement of 90% shareholder approval prescribed under Section 233 of Companies Act.

Another proposal aims to ease the requirement of physical documents. At present, the law allows serving documents to the government or shareholders in physical or electronic mode, but if a shareholder asks for a physical copy, the company has to arrange for it for a fee. The amendment aims to make it sufficient for certain classes of companies to serve documents only in electronic format.