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Wednesday, Apr 27, 2005

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`Laws governing corporate sector must be remodelled'

Our Bureau

New Delhi , April 26

A PAPER on reform of business laws and administration of justice, prepared by the Federation of Indian Chambers of Commerce and Industry of India (FICCI) and the Bar Association of India, recommends revamping of the country's judicial landscape to facilitate effective and speedy justice for prompt and unfettered business decisions by the corporate sector.

Remodelling the Companies Act, the Takeover Code and the Competition Act with a view to formulating a road map for future business growth is a key element of the multi-pronged agenda for legislative reforms of business laws to ensure uninhibited growth of the domestic industry in the face of global competition, the paper said.

On streamlining the Takeover Code, the FICCI-Bar Association paper suggests a range of issues for consideration of experts and the legal community.

In view of the lack of clarity on what constitutes the minimum level of public shareholding that a listed company is expected to maintain, FICCI has suggested that SEBI should clarify by amending the Listing Agreement, specifying the minimum limit as 10 or 25 per cent, with appropriate transition provisions to the existing listed companies.

Calling for a flexible and user-friendly Companies Act with focus on transparency and corporate governance, the paper suggests there should be no restriction or ban on the multi-layered structure of subsidiaries that will impinge on corporate expansion and growth. It also urges for creating a mechanism to ensure more transparency and preventing any possible misuse of funds through transfers from one company to another.

As far as competition issues are concerned, the paper identifies imperatives such as the need for providing scope for exception and exemption to meet contingencies. It also suggests stringent penalties to avoid frivolous complaints.

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