The Hindu Business Line : Cos Bill will be user-friendly, assures Govt

Mr Prem Chand Gupta, Minister for Company Affairs, with Mr Y.K. Modi, President, FICCI, at a National Conclave on Draft Companies Bill in the Capital on Thursday. — Kamal Narang

New Delhi , Oct. 7

ALLAYING India Inc's fears that the compressed Companies Bill in its proposed form may end up being accompanied by a large number of rules, the Government on Thursday said that it was committed to making a user-friendly Bill by adopting a consultative approach.

The Minister of State (Independent Charge) for Company Affairs, Mr Prem Chand Gupta, said at the end of 90 days period on October 31 for receiving suggestions from the industry, professionals and other stakeholders on the Concept Paper for a simplified companies law, the Ministry plans to refer it to a high-level committee, which is going to work on the Bill.

He was speaking at the National Conclave on Draft Companies Bill, organised by the Federation of Indian Chambers of Commerce and Industry (FICCI).

The proposed committee will comprise representatives from the industry, chambers of commerce, cost and works accountants, company secretaries, chartered accountants and lawyers. The Minister stressed that the head of the committee will not be a Government official.

Regarding industry apprehensions on the large number of rules which it will have to deal with once the Act is amended, the Minister said,

"The rules and the Bill are most likely to be released together and will be put on the Web site. They will be available for public debate for a period of 60 days."

In his response to the issue of reducing the limit of independent directors and issuing a code of conduct for directors, Mr Gupta said that the most important point is the protection of investor interests.

The Minister also cautioned the celebrities lending their names as directors to a company.

"The small investors invest in companies seeing the names of celebrities on the prospectus, while in most of the cases the celebrities provide their name to a company for a fee," he said.

Responding to the industry request for not to treat all public deposit defaults as a cognisable offence as these were unsecured and driven by risk reward trade offs, the Minister said, "I have very clear views on this point. If a company has raised deposits from the public and has undertaken fraudulent activities there can be no exception or leniency for them."

On the industry request to review the proposed ban on multi-layered structure of subsidiaries in the Concept Paper, Mr Gupta referred to the blatant siphoning of funds making use of the pyramid structure.