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  • Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 12/21/2012

India - Corporate governance rules in Companies Bill, 2012 

December 21:  The Companies Bill, 2012, was passed in Lok Sabha on 18 December 2012, after the 2011 version was amended based on parliamentary recommendations.

Some of the amendments in Companies Bill, 2012 include the following:


  • A full-time director is also covered under the definition of "key managerial personnel."
  • The consolidation / division of shares involving changes in the voting percentage requires approval of a tribunal.
  • The auditor is to be rotated "at such interval" as may be determined by resolution.
  • The limit of the number of companies for which a person may be appointed as auditor is proposed as 20 companies. In case of an audit firm, the limit is applicable to each partner.
  • Appointment of auditors for a five-year period is subject to ratification at every annual general meeting.
  • A one-year period is allowed for companies to comply with new provisions relating to the composition of the Board of Directors.
  • The minimum rate of interest on inter-corporate loan is to be the prevailing rate of interest on government securities.
  • Companies with multiple businesses cannot appoint the same individual to serve as the chairperson or managing direction or chief executive office at the same time (some exceptions apply).

Read a December 2012 report [PDF 238 KB] prepared by the KPMG member firm in India: Highlights of the Companies Bill, 2012




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