Restructuring Corporate Laws & Management in India

Dear Professional colleagues,

Out of my industrial experience of 30 years besides having completed CA & CS, I want to share my experience with all concerned and suggest the change/ammendments in the area of corporate laws that will streamline the legal compliance by professionals and will make the business entities more responsible and law complient.

1. Free reserves and surplus balance should not exceed 100% of the paid up capital of any company. this will make even private companies to pay dividends and will promote investment in private companies also.

2. Private companies must be allowed to receive unsecured loans from shareholders, directors, employees and business associates up to paid up capital only and interest rates must not exceed PLR.

3. Private companies should be allowed to appoint company secretaries like statutory auditors, ie company secretaries firms must be allowed to be appointed as company secretary.

4. Deemed Public Companies under ertwhile Sec 43A of companies act 1956 must add word private in their name since some companies misguide public as being large scale public company while they are family business in reality.

5. Minimum paid up capital must be fixed for each private n public company and it should be quite good amount so that small family business are not formed as company to misguide public in general ie appoint oneself as managing director, executive director, chief executive officer etc, fix high salaries to directors as share in profits, claim tax rebates on personal expenses etc.

6. Minimum number of share holders must be fixed for private n public companies, in proportion to paid up capital of the company. This will make every large company a widely held company to ensure compliance of corporate regime.

7. Every company must be required to nominate and submit list of directors, key managerial personnel, authorized signatories under various laws applicable to it like Income Tax, Sales Tax, Excise, Customs, Banks etc on MCA website every year with contact details.

8. Audit of every kind should be applicable on the basis of some threshold limits like, paid up capital, annual turnover, secured loans, capital n free reserves etc in case of private companies.

9. Public company must be required to issue its securities to public, govt bodies, financial institutions through stock exchanges up to certain limit so that public companies are not managed like family business and family business are not run in the name of public companies(deemed public co)

I cordially invite suggestions on the above matter and request my professional colleagues to get suitable amendments in laws to make business more professional, law compliant and society friendly.