The Bill, which replaces the 57-year old regulations, aims to protect interest of employees and small investors while encouraging companies to undertake social welfare voluntarily instead of imposing that through 'inspector raj'

President Pranab Mukherjee has given his assent to the Companies Bill 2013. With this move, India has now got a new company law that has replaced the erstwhile Companies Act 1956.

The Bill, which replaces the 57-year old regulations, aims to protect interest of employees and small investors while encouraging companies to undertake social welfare voluntarily instead of imposing that through 'inspector raj'.

Given the recent corporate scandals there has been a greater focus on better corporate governance and transparency in the new Companies Bill with stricter punitive action. However, its effectiveness would be known only when the provisions come into force.

Last week, while speaking at a Moneylife Foundation seminar, Savithri Parekh, Head of Legal & Secretarial, Pidilite Industries, said, "The new Companies Bill has brought in a lot of transparency by making companies disseminate information in a clear and transparent manner."

Jayant Thakur, Chartered Accountant, who advises listed and non-listed companies and intermediaries on SEBI laws, said, “Many of the new provisions in the new version of the Companies Bill 2012 have been made because of two major incidents, one is the Satyam scam and the other is that of Sahara. These two incidents raised many questions with the provisions of the existing law such as that of independent directors, voting powers etc. and how could the shareholders be compensated for the losses. All this has led to new provisions such as that of class action suits.”

Read: New Companies Act: Towards Better Governance?

 In December 2011, the Bill was introduced in the Lok Sabha by the then corporate affairs minister Veerappa Moily after he withdrew a similar legislation of 2009 on the ground that the revised measure incorporating several recommendations and suggestions made by the Parliamentary Standing Committee on Finance and various stakeholders.

For the first time, the Bill makes it mandatory for firms to maintain their documents in electronic format, introduces the concept of e-governance, makes provision for encouraging ethical corporate behaviour and rewards employees for their integrity.

Read: Key highlights of Companies Bill (Companies Bill gets Parliamentary nod, finally)

Among the measures proposed in the fresh bill to enhance accountability are those, which provide for additional disclosure norms, facilitate raising of capital, mergers and acquisition and protection of investors and minority shareholders, the Statement on Objects and Reasons of the Bill said.

The Corporate Affairs Ministry is expected in the next few weeks to come up with draft rules for public comments.