New Companies Act 2013 in the interest of stakeholders

The Companies Act 2013 which is expected to be fully operational by April 2014, goes a long way in protecting shareholders’ interests and removes administrative burden in several areas. The Act brings modern regulations for the corporate sector and attempts to align with international requirements. There are many areas which are subject to rules that are to be issued under the new Act. The scale of change can be assessed only after rules are finally issued and the devil could be in the details. The Act would protect minority shareholders, investor protection and better framework for insolvency regulation, besides institutional structure. The Act promises to substantively raise the bar on governance and purports to deal with relevant themes such as investor protection, fraud mitigation, inclusive agenda, auditor accountability, reporting framework, director responsibility and efficient restructuring. The Act is likely to have far reaching consequences on all companies, as it has been influenced significantly by other recent developments in the corporate sector, especially those where stakeholder interests seemed to be compromised.

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