New Co Law could clash with Sebi
Proposed law pegs maximum strength of independent directors on company boards at 33% against Sebi stipulation of 50%
The new Company Law could mandate the strength of independent directors on boards of companies be 33%, pitting the government against Sebi which stipulates 50% of directors on boards of listed companies should be independent.
“I think the figure of one-third is sufficient,” Minister of Corporate Affairs, Prem Chand Gupta, told newspersons here on the sidelines of a seminar on accounting standards organised by Assocham.
The J J Irani Committee, formed to suggest the framework of the new law, has recommended that the independent directors should form one-third of the boards.
The minister said that Sebi was a sectoral regulator for listed companies while the law would deal with all companies and would have wide scope of work.
When asked whether a situation could emerge where listed companies comply with Sebi guidelines while unlisted companies could fill 33% of their board positions with independent directors, Gupta refused to comment.
He said the new Company Law was being formulated in consultation with corporates and if they had said that the limit of independent directors on boards should be 25% of the total strength it would have been accepted.
Gupta said the Bill for the new law would be introduced in the winter session and was being formulated by the Law Ministry. “I would have liked to place the Bill in Parliament earlier but as it will replace an old complicated Act, the consultation process is taking time,” he said.
The new law has been in the making for more than two years.
Gupta said basic idea behind bringing a new law was to bring a simple, compact and unambiguous Companies Act, incorporating the international best practices in tune with present day requirements.
He said since the implementation of e-governance programme MCA-21, the life has become easier for corporates and their compliance rate has improved by 50%.
The staff of Registrar of Companies that has been rendered excess by the implementation of the programme would now be utilised for inspections to see that companies are complying with the law.
New Indian company law to take one more year
Corporate affairs minister says bill will be presented in parliament in winter session, not monsoon session as earlier planned
New Delhi: It’s been in the making for two years now, but Indian corporates will have to wait for another year for a new company law that seeks to keep the government from interfering in the everyday affairs of companies.
The new law, based on the recommendations made by the J.J. Irani Committee in 2005, is going through inter-ministerial discussions before it is placed in Parliament.
The number of provisions in the new law would be a third of that in the existing law
“My target was to introduce the bill in the monsoon session of Parliament. But as it will replace an old law which has been amended 25 times, we would be able to place in Parliament only in the winter session,” corporate affairs minister Prem Chand Gupta said on the sidelines of a seminar organised by the Institute of Trade and Industrial Development.
“By the middle of next year, you will have a new company law,” he said.
Gupta said the number of provisions in the new Act would be one-third of the 786 provisions in the existing law.
The new law would be easy to understand and will do away with the government’s role in the everyday affairs of the companies, he said. “Government would only step in when there is default or defiance,” Gupta added.
He said the new law would move from the system of approvals to self-regulation.
The Minister said that Limited Partnership Bill, which was introduced in Parliament in December, is likely to be passed in the winter session. At present, the Parliamentary Committee is examining it.
When passed, the Bill would allow partnerships where the liability of partners would be limited to their responsibility in the organisation. It would also allow partnerships with unlimited members.