Financial Daily from THE HINDU group of publications
Thursday, Dec 23, 2004
Regulatory Bodies & Rulings
House panel pulls up Ministry for not following recommendations on CLB
New Delhi , Dec. 22
THE Standing Committee on Finance has pulled up the Ministry of Company Affairs for not taking the recommendations of the committee seriously with regard to the functioning of the Company Law Board (CLB) and the continued downward trends in inspections of companies carried out by the Government.
In its Ninth Report (action taken by the Government on the recommendations contained in the Fifth Report of the Standing Committee on Finance on Demands for Grants (2004-05) of the Ministry of Company Affairs) the Standing Committee reiterated its earlier recommendation to fill up all vacancies in the CLB without further delay.
The committee also stated that it would like to be informed of the steps taken by the Government in this regard within two months after the presentation of this Report (December 22).
The CLB is currently managed by three members as against the sanctioned strength of nine members.
The committee also stated that it was not convinced with the Government reply with regard to the trend in inspections undertaken. The Government had stated that inspecting officers were busy in preparation of 96 supplementary inspection reports relating to the recommendation of the Joint Parliamentary Committee on stock market scam.
Even if these 96 reports are taken into consideration and treated as inspections under the Companies Act, the number of inspections done during the period would be less than 1 per cent of the total number of 6,52,000 companies, the committee noted.
It observed that it was constrained to find that the Cadre Review Committee for Indian Company Law Service (ICLS) and the Shardul Shroff Committee on outsourcing the routine inspection set up by the Ministry could not finalise their report.
This has resulted in the delay of the revamping of inspection wing and outsourcing of routine inspection mechanism even after a lapse of four months since the report of the Standing Committee (August 2004) was presented.
The committee was of the opinion that unless cadre review of the staff is done and routine inspections outsourced, there will be no significant improvement in the matter of inspections. It, therefore, desired that the Government should take positive steps in this direction so that the exercise for cadre review is expedited and the recommendations made by the Shroff Committee are finalised at the earliest so that the inspection wing of the Ministry could be strengthened.
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