New Delhi: To ease the compliance burden for small companies including start-ups and MSMEs, a Parliamentary panel has suggested compliance threshold in Companies Act should be based on business volume or turnover rather than form of the company.

Rules framed under the Companies Act should be modified with a view to making the compliance processes simpler and easier for all companies incorporated under the Act.

The observations are part of the Standing Committee on Finance, headed by senior Congress leader Veerappa Moily, report tabled in the Parliament on December 7 .

“The Compliance threshold should be based on business volume or turnover or scale of operations rather than form of the company. This will ease the compliance burden for smaller companies including start-ups and MSMEs,” the panel suggested.

The panel suggested that ambiguities should be rectified with regard to acceptance of deposits from public.

It suggested, “Section 73 of the Act contains provisions prohibiting acceptance of deposits from public under certain circumstances, which is to be read with Section 76, which allows a public company of prescribed size to invite deposits from persons other than its members, while existing Rules allow an eligible company to invite deposits from its members”.

Besides, the panel recommended that government should retain the right to seek necessary information on aspects relating to managerial remuneration of listed companies.

The government should “analyse and review the new concept of ‘one person company’ and its sustainability in the company law, particularly considering the shelter or scope it provides for incurring huge and needless liabilities without concurrent responsibility to discharge them.”

Source: Times of India