Financial Daily from THE HINDU group of publications
Friday, Jul 12, 2002
DCA Secy seeks changes in Companies Act
HYDERABAD, July 11
IN the changed economic scenario, good corporate governance has become the most important issue to gain national and international credibility for Indian companies and to facilitate this, the Company Law of 1956, a product of the old economy, needs drastic changes, according to Mr Vinod K. Dhall, Secretary of the Department of Company Affairs.
Mr Dhall, who took part in an interaction session with members of the Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI), said that some changes in the Act had been effected in tune with the times but the agenda was still unfinished.
In the last three years, amendments focused on investor protection, share nomination, sweat equity, buyback of shares, postal ballot, action against companies that went public, collected large sums of money and vanished and appointment of directors for protecting shareholders' interests. He said the need of the hour was to ensure that the corporate sector played by the rule.
There was no provision to deliver adequate punishment to those guilty of economic offences and the stock markets offered abundant chances for the scamsters.
Crisil also had questioned the accounts of a number of companies and all these reflected on the health of the corporate sector.
In August last year, inter-State cooperatives were allowed to convert themselves into companies with the rider that they should continue to have all the attributes of a cooperative.
A Bill on this was to be taken up for passage in the next session of Parliament, he said.
Competition Bill, a path-breaking provision abolishing the MRTP Act and promoting healthy competition in the business sector and a Bill on the creation of national company law tribunal to take over the functions of the high courts and the Board for Industrial and Financial Reconstruction were the other important changes being brought about soon. The Bills were before the standing committee of Parliament.
Mr Dhall further said that audit committees should have the authority and independence to question managements of companies on accounts.
Random scrutiny of companies by professional bodies and disciplinary action against defaulting auditors were being thought of, he added.
He said a formal decision was taken to allow companies to hold routine board meetings through video conferencing. Submission of annual accounts to the general body would not come under this facility.
For the benefit of the corporate sector, the offices of the Registrar of Companies (RoC) would be modernised to offer service online.
On the occasion, the FAPCCI made numerous suggestions to Mr Dhall on privatisation of the RoC office, publicity as to the due dates for filing various returns/forms and on provisions of the Act/schedules to be aligned with the accounting standards.
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