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While not willing to specify when the Companies Bill may actually be enacted into law, Mr S. Balasubramanian said it was most likely to be passed in the Winter Session.

Kolkata , Oct. 20

POWER does not come without responsibility, and an independent director in a listed company will have to take up responsibility for select areas of the company's operations, and will accordingly have to be held liable for any lapses therein directly relating to those specific areas. While these directors have to made accountable, they should also be adequately compensated.

Mr S. Balasubramanian, Chairman, Company Law Board, told Business Line here on Monday that suggestions from various bodies were still coming in for making suitable additions/omissions in The Companies (Amendment) Bill, 2003, now pending before Parliament. While not willing to specify when the Bill may actually be enacted into law, he said it was most likely to be passed in the Winter Session, after which the due diligence process of Cabinet and other clearances might take some three or four months.

On the future of the CLB, he said it would eventually be abolished, and the powers would be transferred to the National Company Law Tribunal, which would be the adjudicating body. The process, he felt, might take some four or five months.

Asked whether there was any discrepancy between what has been proposed in the Companies Bill, and what the Department of Company Affairs (DCA) may have in mind with regard to appointment of qualified company secretaries in companies, as mandated by law now, Mr Balasubramanian replied in the negative, saying the whole objective behind the Bill was to strengthen the Act and provide that much needed `leg up' for the professional body of company secretaries. There was a convergence of views on the appointment of company secretaries, he clarified.

Explaining the provisions of the Bill, particularly the rationale behind the recommendations of the Naresh Chandra Committee on the need for a "majority of independent directors in companies (minimum of seven for companies with a paid-up equity of Rs 5 cr or more or turnover of Rs 50 crore or more), Mr Balasubramanian said that while such directors would have to be made accountable, they also had to be adequately remunerated through a process of consensual decision-making.

He said the specific areas of responsibility had to be clearly identified, and the ultimate objective should be achieving greater transparency in corporate governance, so that shareholders' interests are adequately protected.

He, however, tended to agree that that there might have to be some kind of back-up for the independent directors with regard to prosecution under various civil and criminal laws, to retain their interest in the corporate sector.

He also defended the clause in the Bill that provides that in case of default in respect of issue of debenture or payment of debenture interest, every debenture trustee would be punishable with imprisonment or fine.

Asked to clearly define the concept of an independent director, Mr Balasubramanian said it was basically a "state of the mind" where the director will have to exercise independent judgement in the most transparent manner in the overriding interest of shareholders. He was speaking at an interactive session organised by the Merchants Chamber of Commerce (MCC).

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