The Hindu Business Line : Company Law Draft Bill likely to be presented in winter session

Dr J.J. Irani (right), Chairman of the JJ Irani Committee on Company Law, with Mr C.V. Achut Rao, President of the Federation of Andhra Pradesh Chambers of Commerce and Industry, in Hyderabad on Saturday. - P. V. Sivakumar

Hyderabad , Sept. 3

A draft Bill on the new Company Law that seeks to revise the 50-year-old Companies Act (1956) is likely to be introduced in the winter session of Parliament.

The draft should be ready by the month-end, according to Dr J.J. Irani, who headed the 17-member expert panel set up by the Union Government to recommend changes to the Company Law. The committee submitted its report in May.

Addressing the inaugural of a day-long meeting on the report organised by the Federation of Andhra Pradesh Chambers of Commerce and Industry, Dr Irani dwelt on the important recommendations made by the committee.

Dr Irani, Director of Tata Sons, said that a minimum of one-third of the total number of directors must be independent directors in listed companies and in companies that accept public deposits.

This, however, should not include nominee directors as they represented specific interests.

The panel felt the presence of a good number of independent directors on

boards will improve corporate governance. The regulator, however, might specify the number.

The panel wanted an individual to hold maximum directorship of 15. It also wanted to make companies preserve the composition of the board for two years or till the procured funds were used, conforming to the objectives cited in the prospectus.

In case a director resigned from such a company, his/her liability will continue through the two-year period. Dr Irani said the provisions of the new law should hold good for public sector undertakings as well.

Mr B.V.R. Mohan Reddy, Chairman and Managing Director of Infotech Enterprises, differed with the panel with regard to the number of independent directors on the board. Quality and not quantity should be the criterion, he said.

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