The Hindu Business Line : Concept paper on Company Law: Ministry begins rule-making exercise

The draft rules and the Companies Bill would be released together and put on the Ministry Web site to elicit public response. In fact, once all recommendations on the paper are received, the Government proposes to constitute a high-level committee that will examine the suggestions received and frame the Bill.

New Delhi , Oct. 26

THE Ministry of Company Affairs has started work on the rule-making exercise for the various provisions proposed in the concept paper for the revamped Company Law. The concept paper which empowers the Central Government to make rules, de-links procedural aspects of law from substantive law.

"The rules are likely to be ready by December. By then, the Ministry would have worked on the suggestions received on the concept paper also," sources told Business Line. In fact, the Minister of Company Affairs, Mr Prem Chand Gupta, while allaying the fears of the corporate sector that the compressed Companies Bill in its proposed form may end up being accompanied by a large number of rules, had said that the Government would adopt a consultative approach before firming up the rules. The draft rules and the Companies Bill would be released together and put on the Ministry Web site to elicit public response, he had said. In fact, once all recommendations on the concept paper are received, the Government proposes to constitute a high-level committee that will examine the suggestions received and frame the Bill. The last date for giving suggestions on concept paper is October 31.

Commenting on the rule-making powers provided for in the concept paper, a senior Ministry official stated, "The idea behind having the rule-making powers is not to misuse it. It is a process with adequate checks and balances."

Further, the concept paper has notes on each chapter that contains what is proposed to be done in rules, sources explained.

Ministry sources reiterated that the thought process while adopting the norms for having rules was that frequent amendments to Act is not required, just like the SEBI Act, where orders are issued through guidelines and monitored through the same.

According to the Federation of Indian Chambers of Commerce and Industry (FICCI), "A detailed review of the concept paper reveals that there is almost a compulsive obsession to provide for, in the rules, almost every conceivable detail in the section. For example, the procedure for share buybacks will be in the rules. There could be apprehensions that the rules, so framed may not over reach and complicate matters further."