Calcutta, Feb. 22: Amendments to the Companies Act 2013 and the adoption of the insolvency and bankruptcy code are important to improve the ease of doing business, according to the Institute of Company Secretaries of India (ICSI).

"The Companies Law Committee was formed because industry and entrepreneurs and professionals were all saying that there are many draconian provisions in Companies Act 2013, which should be reviewed," ICSI president Mamta Binani said.

She said the incorporation of companies has fallen following the act, adding that many entrepreneurs are shying away from forming companies as they feel certain provisions are too stringent. A filing with the corporate affairs ministry shows that the number of registered companies has come down to around 70,000 in 2014 from over 90,000 a year ago.

"The report (of the committee) has gone for public comments. There could be 100 odd amendments if it goes as such," Binani said.

In a relief to the corporate sector, one of the major changes proposed in the report is the amendment to Section 185 of the companies act, which deals with loan to directors. Earlier, no company could advance a loan to its directors and any contravention attracted penalty. The committee in its report has allowed companies to advance loans subject to prior approval by a special resolution.

"Insolvency and bankruptcy code is a very important legislation and it will also help in the ease of doing business. At present, it can take a long time for the closure of a company and it is a big deterrent to the business houses. This code proposes to close such businesses in accordance with a timeline," Binani said, adding that the plan to create a company law tribunal to replace the Company Law Board is a welcome move.