The Hindu Business Line : Panel to examine regulatory overlaps in corporate work

THE Government has asked the Dr J.J. Irani Committee to consider the issues relating to conflict or overlap of jurisdiction on different aspects of corporate operations by various regulatory agencies.

The Minister of State (Independent Charge) for Company Affairs (MCA), Mr Prem Chand Gupta, told Business Line, "It is in the interest of all concerned that the entire framework operates in a harmonious manner."

India Inc has been expressing concern over the overlaps between regulatory agencies, especially for listed companies. They had pointed that there were issues which both Company Affairs and the capital market regulator, Securities & Exchange Board of India (SEBI), cover.

"This duplication of law-making power for the same subject impinges on the functioning of the company and increases the cost of compliance. There should be a single authority that makes the laws and rules for one subject," the Federation of Indian Chambers of Commerce and Industry (FICCI) President, Mr Onkar S. Kanwar, said.

The Minister also echoed the sentiments of corporate India, "In today's business environment, the domestic enterprises can contribute effectively in the economic development of the nation, only if they are provided with a level playing field."

Agreeing that the modern company law should be simple, the Minister said there was a need to distinguish the framework applicable to private companies compared to those where substantial public interest is involved. He called for prescribing a regime for the later category that can effectively protect the interests of stakeholders in general and small investors in particular.

Mr Gupta also suggested that the committee, set up to advise the Government on new company law, should examine the prospects of reducing procedural formalities including multiplicity of reports and returns filed by the companies.

On penal provisions, the minister said there is a need to revisit this issue with a view to evolve a system that has a deterrent effect on intentional wrong-doers, while avoiding unnecessary harassment to those who might have unintentionally contravened certain procedural provisions.

Besides, the courts must not be burdened with everything, the minister said.

While endorsing the industry demand for self-regulation by corporate India, Mr Gupta cautioned, "Self-regulation should be coupled with stricter compliance of law, transparency through proper disclosures and good corporate governance."

Meanwhile, the 13-member expert committee to advise the Government on the new company law held its first meeting here on Monday. The committee, headed by Dr Irani, has been asked to submit its recommendations within three months of its constitution (December 2, 2004).

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