The Hindu Business Line : Companies Bill to be tabled in winter session

Mutual meet: Mr A.P. Kurian, Chairman, Association of Mutual Funds of India, Mr Anurag Goel, Secretary, Ministry of Corporate Affairs, Mr Anil K. Agarwal, immediate past President, Assocham, at the 4th International Mutual Fund Summit in Bangalore on Saturday.

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Bangalore, Sept. 22 Amendments to the Companies Act, 1956, were expected to be tabled in Parliament during the winter session.

Speaking at a seminar on mutual funds jointly sponsored by Assocham and the Association of Mutual Funds of India (AMFI), the Union Ministry of Corporate Affairs Secretary, Mr Anurag Goel, said, “We have completed consultations with the industries and all concerned parties. The Bill will be tabled this winter session.”

Mr Goel said that the Government had taken about eight months for converting the recommendations of the Irani Committee into legislative form. The proposed changes were now before the Ministry of Law. The committee headed by Dr J.J. Irani had submitted its recommendations in June 2005.

Besides, the Limited Liability Partnership Bill would also be tabled during the session, he said. This particular Bill is aimed at regulating small and medium enterprises and professional firms of chartered accountants, solicitors and company secretaries to make them globally competitive. The consultative Committee had completed its review and the Bill was now almost ready, he added.

Mr Goel said that the changes in the Companies Act were intended at protecting interests of investors. In addition, the amendments were also intended to restructure the office of the Registrar of Company Affairs and the Official Liquidators Office.

Earlier, the whole-time director in the Securities Exchange Board of India (SEBI), Mr T.C. Nair, said the days of the market instability due to the presence of foreign institutional investors were over. He said, “FIIs impact on market stability is no longer a factor.” This was largely on account of the presence of domestic mutual funds.

But he said that there were more funds waiting to enter the domestic market. Accordingly, the mutual fund sector was likely to become competitive in the coming months.

High transaction costs

He, however, expressed concern over the high transaction costs. He said that transaction costs in the form of management fees, entry/exit loads would have to be brought down. He said that the competition in the industry through increasing number of players itself would help increase the assets under management further from the current level of Rs 4.67 lakh crore and help bring down the transaction costs.

Earlier, the Ministry of Finance, Director (Capital Markets), Mr M. Sahu, said that while 50 per cent of the gross domestic savings was from the household sector, only about 4 per cent invested in mutual funds.

Corporate savings

At least 60 per of the assets under management of the mutual funds were generated from corporate savings. Besides, he said, there was also discrimination between corporate and retail savers. The latter was subjected to hefty entry loads.

However, the AMFI Chairman, Mr A.P. Kurian, said the large corporate savings was on account of the high returns offered by funds compared with other investments. He said, “Corporate savings will flow where the returns were high.”