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Richa Mishra

New Delhi , Jan. 1

INDIA Inc is not in favour of public disclosure of the annual report and balance sheet of private limited companies. "Otherwise the basic objective of such companies would be defeated," industry players said.

In fact, the Federation of Indian Chambers of Commerce and Industry (FICCI) has written to the Department of Company Affairs (DCA) Secretary, Mr M.M.K. Sardana, suggesting that such companies should not be asked to disclose their annual report and balance-sheet. "It has been given to understand that there is a move on the part of the Government to ask private limited companies to disclose their annual report and balance-sheet. It is important that such requirement should not be prescribed in the law and made mandatory since there is no public interest involved," FICCI said.

Further, in such cases, borrowings from banks and financial institutions are also not involved, a FICCI official said adding, "there is a general feeling that excessive regulations under the law is forcing the company Boards to spend more time on compliance and implementation of the same rather than on the company's growth. What is important is that law should be enabling rather than detrimental to competition and effective growth of the corporate sector."

The law has to specify the environment under which the corporate sector has to operate, and not how they have to operate, the official told Business Line. Elaborating further, the official said, international experience shows that a major source of growth of industrial sector has been the small and private limited companies.

He cited the example of the UK where small and medium sized concerns are subject to lesser regulations, particularly in the matter of accounting and disclosure requirements as compared with larger ones. He felt that it was important that such companies be governed by their Memorandum and Articles of Association.

FICCI for long has been advocating that law of small and medium sized companies should be made subject to minimal compliance requirements. It is also important that a separate law should be enacted for such companies. However, if the same is not possible, then in the newly drafted Companies Act, a separate chapter should be provided for small and private limited companies, the chanmber said.

More Stories on : Accounting Standards | Industry Associations

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