Bangalore: The Companies Bill 2013 has come up with many new rules; few of them are comforting to the Indian corporate sector while many are disconcerting. One particular concept that is disturbing the Indian organizations is that the companies can make investments through “not more than” two layers of investment companies, reports K.R.Srivats of The Hindu, Business Line.
The Bill is expected to prevent companies creating several layers of investment companies to fulfill their hidden motives.
However, there is incongruity between the Companies Bill and the RBI in allowing the number of layers of Investment companies, as pointed out by Vineet Agarwal, Managing Director, Transport Corporation of India. While the new Companies Bill restricts Indian Companies from having more than two layers of investment subsidiaries, the RBI has restricted the number to only one. “This anomaly needs to be cleared,” says Agarwal.
The Bill, however, is not criticized by all. “Although this will reduce flexibility to make investments, it will help prevent creation of a web of investment companies leading to diversion of funds,” says Ashok Haldia, former Secretary of the CA Institute.