Financial Daily from THE HINDU group of publications
Friday, Aug 30, 2002
Financial Daily from THE HINDU group of publications Friday, Aug 30, 2002 |
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Corporate
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Regulatory Bodies & Rulings DCA favours stringent penalties Our Bureau
NEW DELHI, Aug. 29 THE Department of Company Affairs (DCA) has once again made a case for strengthening the existing penalty and compounding provisions under the Companies Act, 1956 to curb widespread violations of the various provisions of the Act. "The problem in our country is that the Companies Act, 1956, is a product of permissions and approvals regime. Even though we have transformed and progressed down the years, the overall structure of the Act has not changed. The regulatory provisions are weak and the penalties provided are a joke," the Secretary, DCA, Mr Vinod Dhall, said at a CII National Workshop of Accounting Standards, here on Thursday. He held that the regulatory framework should enable faster action from the regulator, besides providing for deterring penalties. In this context, he pointed out that the US authorities had been very swift in tackling their deficiencies by enacting the Sarbanes-Oxley Act within a period of two to three months. "Even though a lot of criticism has come about on the US system and its inadequacies, the Congress, the Senate and the Securities Exchange Commission (SEC) have acted swiftly in restoring investor confidence in the system. Moving fast by itself is a virtue which we must learn," Mr Dhall said. On the Sarbanes-Oxley Act, he said that many of the provisions of the US legislation were already there in our laws. "Our system is a relatively healthier than the one in the US. We have checks and balances. That does not mean that every thing is hunky-dory on our side. Some changes of a serious nature are still required," Mr Dhall said. He also indicated that the department may push for mandatory consolidation of accounts of subsidiaries and associate companies with the parent unlisted entities. "Consolidation was an issue which featured in the 1997 Bill. This was not taken up. But enquiries into the stock market scam of March 2001 have brought into light the need and urgency for consolidation of accounts.
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