To suggest amendments in the Companies Act, 2013, a panel constituted by the Union government has submitted its report. The panel was headed by corporate affairs secretary Tapan Ray.
Key recommendations of the Tapan Ray panel
- For managerial remuneration, shareholders’ approval should suffice and no government nod should be needed.
- A firm to be called associate company only when the parent firm owns 20 per cent of voting power in it.
- Insider trading and forward dealing provisions to be removed from the Act as SEBI regulations already exist.
- Institute of Chartered Accountants of India’s regulatory powers to be taken away; National Financial Reporting Authority would be formed.
- Independent directors should not have any pecuniary relationship – where it is getting material benefits – with the company.
- Small frauds of less than Rs 10 lakh not to be considered under harsh provisions.
- Private placement process to be simplified, doing away with separate offer letter, making valuation details public.
- Incorporation process to be made easier, allowing greater flexibility to companies.
- Self-declarations to replace affidavits from subscribers to memorandum and first directors.
- Managerial remuneration to need only shareholders’ approval. No need for government approval.
- Relaxing norms for start-ups to issue sweat equity. Now, 50 per cent of the paid up capital could be issued as sweat equity, against the existing norm of 25 per cent.