Panel suggests easier funding for distressed firms

New Delhi: Enabling issuance of fractional shares, easing norms for distressed companies to raise funds and recognising special purpose acquisition companies as well as permitting their listing on stock exchanges are among the recommendations made by the government-constituted Company Law Committee.

The panel, currently chaired by Corporate Affairs Secretary Rajesh Verma, has also suggested prohibiting the conversion of co-operative societies into a company and replacing requirement of furnishing affidavits with the filing of self-certification/ declaration. The Company Law Committee (CLC) was constituted by the corporate affairs ministry to make recommendations on changes aimed at facilitating and promoting greater ease of doing business as well as ensuring effective implementation of the Companies Act, 2013 and the Limited Liability Partnership Act, 2008.

"For listed companies, such prescriptions may be made in consultation with Sebi. It is also clarified that this recommendation only pertains to cases that would involve a fresh issue of fractional shares by the company and not to those cases where fractional shares get created for the time being on account of any corporate action," the report said.

The ministry has sought comments from stakeholders till May 6 on the CLC report, which was submitted to the government last month. Others suggestions of the panel include allowing certain companies to revert to the financial year followed in India, facilitating certain companies to communicate with their members in only electronic form, allowing companies to hold general meetings in virtual, physical or hybrid modes, and creating an electronic platform for maintenance of statutory registers by companies.