ICAI seek more changes to Companies Act 2013 for ease in doing business

NEW DELHI: To make doing business easier, chartered accountants' grouping ICAI has sought more changes in norms governing companies, including those pertaining to related party transactions. The Institute of Chartered Accountants of India (ICAI) has suggested changes in various aspects of the Companies Act, 2013, whose most provisions came into force from April last. With regard to proposed changes, the institute has communicated with the Corporate Affairs Ministry which is implementing the Act. ICAI President Manoj Fadnis said some concerns with respect to related party transactions norms are yet to be addressed. "We are talking about the concept of ease in doing business... The Ministry has been very receptive," he told PTI. Noting that certain concerns have already been taken care of and some are in the process of being addressed, Fadnis said For the institute, the main concern about related party norms is that a company cannot appoint an auditor if his or her relatives hold shares in that particular firm. "If you look at the social fabric, many of the times such information (about shareholding in companies) are not shared between the relatives... So their shareholding should not be a criteria for qualification of a chartered accountant to be an auditor," Fadnis said. To address the issue, the institute has suggested that the norms should mention "dependent relatives" only. Welcoming the Ministry's latest clarification on companies taking deposits, Fadnis said the move would provide a "lot of relief" for many smaller private limited companies in terms of ensuring compliance with the norms. "It is a good step and it should help a large number of smaller private limited companies to ensure compliance. "Otherwise the law required that certain kinds of deposits were to be repaid by March 31, 2015 and many of these companies did not have funds available to repay those deposits," Fadnis said. On Monday, the Ministry said that amounts received by private firms from its members, directors or their relatives prior to April 1, 2014, would not considered as deposits under the new companies law. To ease practical difficulties faced by stakeholders, the government has already moved a Companies (Amendment) Bill, 2014. The changes have been approved by Lok Sabha and is now awaiting Rajya Sabha nod. As per the Ministry, some of the amendments are aimed at further facilitating ease of doing business. On the proposed National Financial Reporting Authority (NFRA), Fadnis said there needs to be more deliberations on the matter. ICAI has raised concerns about setting up the new body.