NEW DELHI: The government on Thursday introduced the Companies Amendment Bill, 2019 in the Lok Sabha to widen the scope of crackdown on corporates following violation of corporate rules. The new law has formulated a guideline on the use of CSR funds. These changes will also help in enhancing business facilitation in the country. Finance Minister Nirmala Sitharaman said the changes in the corporate law will strengthen the norms of corporate governance.

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This will improve compliance management and ensure better enforcement as corporate accountability increases. According to the new corporate law, the government will have more powers to take stricter measures against corporates who violate the rules. This law will further enable the National Financial Reporting Authority (NFRA) through divisions and executive bodies.

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A total of 43 changes have been made in section 16 of the Companies Act-2013. Under the scheme, more powers will be given to the Registrar of Companies so that if a company is not carrying out business activities as per rules, the Registrar can cancel his registration. In addition, a guideline on Corporate Social Responsibility (CSR) funds has been prepared by changing Section 135.

Under the scheme, if a certain sector company has benefited in a financial year, it will be able to spend two per cent of its three-year average profit in CSR activities. Currently, the remaining CSR funds are credited to the special account and have to be spent within three years. If it still remains, it is credited to a special fund under Article 6.

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