Faced with implementation hurdles, the Confederation of Indian Industry (CII) has called for a comprehensive review of the new Companies Act 2013 and the rules issued thereunder.

Due to the hurried pace in which the new law and its rules were implemented, industry barely got an opportunity to absorb and understand the provisions or their impact in entirety, Ajay Shriram, CII President, said in a statement.

The rush to notify the new law has introduced disruptive features, making it harder for corporates to ensure compliance, he said.

Many new concepts are being introduced in the legislation for the first time, and practices with respect to these need to be allowed to evolve over time.

He said that the final set of rules was released in the last week of March to be implemented from April 1.

The Government needs to trust industry, he said, adding that one or two incidents of corporate malfeasance should not lead to mistrust of the entire spectrum of corporate India and should not make normal business activities difficult.

“While the country is looking to improve its image after a series of setbacks like retrospective changes to tax laws, poor economic conditions, etc, an unclear and cumbersome Companies Act would make things worse.”

India already ranks very low in terms of ease of doing business and the new company law will further add to the cost and complications of doing business.

In absence of any unambiguous clarifications from the Corporate Affairs Ministry, companies are resorting to different interpretations of the provisions. There is no uniform interpretation of even items of ordinary business such as appointment of Independent Directors, CII, has said.

There are several inconsistencies between the Act and Rules and at times within the Act itself, the chamber statement added.

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