SEBI may face dilemma in implementing some recommendations of Kotak Committee. The Ministry of Corporate Affairs (MCA) expressed its doubts over various recommendations of the committee as they clashed with basic principals of companies law and were an encroachment into their jurisdictions.
MCA felt the committee aimed at creating a separate jurisdiction for SEBI to empower it to make prescriptions under LODR (Listing Obligations and Disclosure Requirements) with regard to matters that were core company law principals and had their right place in Companies Act (CA) only. Of the 66 recommendations, MCA had expressed its doubts over 30 and the Kotak committee has tried to accommodate some of this.
“Core company law principals, for which specific provisions have been provided in the Act and which should be uniformly applicable to all companies, should not be proposed for modification,” MCA said in a letter to Kotak Committee.
The Committee says that number of board meetings in a year should be be extended to five from current four. The MCA says it is not necessary as central government can change requirement of minimum number of board meetings for certain class of companies and if required it can be brought under CA through a notification.
Kotak committee recommends that quorum for a board meeting should be one third of its total strength or three directors, whichever is higher, including at least one independent director and subject to the requirements of CA. The MCA believes LODR is not required to prescribe quorum.