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Richa Mishra
K.R. Srivats

The panel has made a case for "harmonious construction" of the operation of the state and regulatory agencies set up by it.

New Delhi , June 17

THE J.J. Irani Committee on Company Law has brushed aside the suggestion that companies accessing funds from the capital market should be under the sole control and supervision of a single regulator and liberated from all other laws of the state.

In fact, the committee has argued that the state, represented by the Ministry of Company Affairs, has an important role to play in the overseeing of corporate functioning.

It has made a case for "harmonious construction" of the operation of the state and regulatory agencies set up by it.

"We do not subscribe to the view that corporates seeking access to capital need to be liberated from their responsibilities under all other laws and thereby the oversight by the state, and be subjected to exclusive control and supervision of a specific regulator," the committee said.

Commenting on the issue of regulatory overlap, it said in its report that perception in some quarters on the need to demarcate the respective jurisdiction of the Ministry and the SEBI was misplaced.

India Inc has been voicing concerns over the regulatory overlap between SEBI and the Ministry, especially with reference to the issue of corporate governance norms.

On the legal framework, the committee has said that the Union Government is represented through a Ministry, which would be required to exercise the sovereign function and discharge the responsibility of the state in corporate regulation.

SEBI, on the other hand, is a capital market regulator having distinct responsibilities in regulation of intermediaries in the capital market and interaction between entities seeking to raise and invest capital.

Stating that corporate governance goes far beyond access to capital, the committee has said that taking a narrow view by limiting it to public issue of capital and the process that follows would be to the detriment of the corporate entities themselves.

The committee has also said that with the substantive law being compiled to reflect the core governing principles of corporate operations and separation of procedural aspects, it would be possible for the regulator to provide the framework of rules for its domain consistent with the law.

Such rules would be complementary to the legislative framework and there would be no overlap or conflict of jurisdiction between the regulatory bodies.

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