Cabinet clears Companies Bill providing for stricter corporate norms

Union Cabinet on Thursday approved the Companies Bill. Top official sources said that the bill is likely to be tabled in the current session of Parliament. The Bill provides for stricter corporate governance norms. Once approved by Parliament, it will replace the Companies Act of 1956. Among other things, the bill 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 proposes that companies should earmark 2 per cent of the average profit of the preceding three years for Companies Social Responsibility activities and make a disclosure to shareholders about the policy adopted in the process.