New Delhi : The committee has also proposes raising the upper age limit for such appointments from 70 years to 75 years without requiring shareholders to pass a special resolution.
The recommendations are part of an over 1,100-page report tabled in Parliament by the Joint Committee on the Companies (Amendment) Bill.
A parliamentary committee examining the Companies (Amendment) Bill has recommended reducing the minimum age for appointment as a managing director (MD) and whole-time director from 21 years to 18 years, aligning India’s corporate governance rules with several major economies like the US, Germany, Australia and Singapore.
According to a Times of India (TOI) report, the committee has also proposed raising the upper age limit for such appointments from 70 years to 75 years without requiring shareholders to pass a special resolution.
The recommendations are part of an over 1,100-page report tabled in Parliament by the Joint Committee on the Companies (Amendment) Bill.
Why the panel wants to lower the age:
The committee said the move aims to encourage greater participation of young professionals in corporate leadership.
“During the deliberations, a general consensus within the committee arose as to lowering of the minimum age from 21 to 18 years. The ministry (of corporate affairs) has informed that similar suggestions were received from HLC-Niti Aayog in order to encourage and increase the representation of young people on boards…” the panel, chaired by Sudheer Gupta, said in the report, as quoted by TOI.
The report noted that the revised age limit would bring India in line with countries such as the US, Singapore, Germany and Australia, where similar age thresholds are already in place.
Proposal to raise upper age limit:
The committee has also recommended increasing the maximum age for managing directors and whole-time directors from 70 years to 75 years.
As per the TOI report, the proposal would remove the current requirement of obtaining a special resolution from shareholders for appointments beyond the prescribed age limit.
Panel seeks further decriminalisation:
While supporting the government’s efforts to decriminalise provisions under company law, the committee suggested dropping some proposals included in the amendment bill.
According to TOI, one such recommendation relates to the National Financial Reporting Authority (NFRA). Instead of one of the proposed changes concerning the regulator, the committee recommended retaining a penalty-based approach.
Dedicated NCLT benches for insolvency cases:
The committee has also backed the creation of specialised National Company Law Tribunal (NCLT) benches to exclusively deal with insolvency matters under the Insolvency and Bankruptcy Code (IBC).
“Dedicated benches focused solely on insolvency matters would guarantee strict adherence to statutory resolution timelines, which would significantly help to avoid value erosion of distressed assets in IBC cases,” it said.
The report added that such benches would also reduce procedural disruptions for regular NCLT benches. “Simultaneously, this would insulate regular benches from unplanned procedural urgencies, thereby enabling them to devote focused attention to routine corporate reorganisations, mergers, and conversions in a predictable and time-bound manner.”
CSR recommendations:
The committee has proposed retaining the current Rs 10 crore net profit threshold for mandatory Corporate Social Responsibility (CSR) compliance.
According to TOI, it also recommended allowing in-kind CSR contributions for small companies, continuing the negative list of ineligible agencies, and keeping the power to grant CSR exemptions with Parliament instead of delegating it to the executive.
Framework for companies returning to India:
The report also proposes inserting a new chapter in the Companies Act to facilitate the seamless re-domiciliation of foreign companies to International Financial Services Centres (IFSCs) in India without requiring winding up in their home jurisdictions.
The committee observed that several Indian promoters operating through offshore structures may be interested in relocating back to India if an enabling legal framework is created.
“In order to facilitate the reverse-flipping and shifting of foreign subsidiaries of Indian companies back to India, the committee feels that an enabling legal framework including provisions relating to taxation, capital gains, stamp duty, transfer and vesting of assets and liabilities, filing and compliance requirements, continuation of rights and obligations, and other consequential or incidental matters arising from such re-domiciliation, is essential for seamless migration,” the report said.
