The recently enacted Companies Act, 2013 ('the Act') is a landmark legislation with far-reaching consequences on all companies incorporated in India. A part of the Act has already become effective with the notification of 98 sections and the draft Rules are being made public in phases over this month. This is a landmark legislation that will have a wide ranging impact on corporate India.
Corporate India continues to evolve at a fast pace, and besides driving industrial growth is witnessing the emergence of a diverse set of stakeholders. The surge in natural consequences such as risk and default seems to be visibly impacting the virtues of governance, which is precisely the area on which the Act promises to substantively raise the bar. The Act is also quite outward looking and in several areas attempts to harmonize with international requirements.
The Act in a comprehensive form purports to deal with relevant themes such as investor protection, inclusive agenda, fraud mitigation, internal control, director responsibility and efficient restructuring. Indian companies will have to closely examine these developments to develop a clear strategy at ensuring compliance per the new requirements.