The Hindu Business Line : Concept paper for slimmer Companies Act finalised

CORPORATE India's demand for a slimmer and simpler company law may soon be met, with the Ministry of Company Affairs (MCA) having finalised the concept paper for a new Companies Act. The MCA will release the paper on August 4, Mr Prem Chand Gupta, Minister for Company Affairs, said here on Saturday. A high level committee will be constituted by the Ministry to analyse the response from trade, industry and professionals on the concept paper before firming up a draft legislation for replacing the existing Companies Act, 1956.

Addressing the third National Accounting Convention organised by the Associated Chambers of Commerce and Industry of India (Assocham), Mr Gupta said that his Ministry would shortly notify the accounting standards (AS) 1 to 27 (except AS 8 and revised AS 11) that were recommended by the National Advisory Committee on Accounting Standards (NACAS).

While AS 8 deals with accounting for research and development, AS 11 deals with the impact of changes in foreign exchange rates.

Mr Gupta also said that his ministry is considering the recommendation made by NACAS on the applicability of accounting standards on small and medium sized companies. "Since the accounting standards deal with complex issues and require, in many cases, detailed disclosure requirements for small and medium sized companies, it may become too difficult for such companies to make detailed disclosures keeping in view the expertise available with them and the cost involved, which may be more than the commensurate benefits. It is, thus, imperative that some relaxations may be given to such companies," he said.

Mr Gupta also suggested to the Institute of Chartered Accountants of India (ICAI) that it should try to issue some more user-friendly material for better understanding of accounting standards, especially for the non-accountant users of financial statements.