NEW DELHI: Terming the new Companies Bill as “visionary”, especially in the trying times for the corporate sector in view of slowdown in growth, industry experts said the government move of introducing it in Parliament today was a welcome step.
“The structure of the Bill is contemporary and sound and the way it seemed to be emerging encouraged us because it had elements of some visionary improvements — rather than just attend to shortcomings, for example incorporating reactions of corporate failure,” said Sidharth Birla, chairman, Ficci Corporate Law Committee.
The industry chamber has welcomed concepts in the Bill; like innovations for smaller businesses in the form of One-Person-Companies.
It also said the Code for Independent Directors, as has been suggested in a Schedule, is a welcome step “for enhanced as well as a true reflection of accountability has been brought in”.
Among other things, the Bill limits the term of independent director in a company to five consecutive years. The independent director can be reappointed on the board after passing of a special resolution by the company and disclosure of such appointment on the board’s report.
“With specific role and responsibilities defined for Independent Directors and stringent qualifying criteria for such appointment, benefits of transparency and objectivity in decision making of the Company are much likely to flow to the stakeholders with this concept,” Corporate Professionals Group Managing Director Pavan Kumar Vijay said.
Global consulting firm PricewaterhouseCoopers said: “We surely recognise this as a step forward and welcome the initiative of MCA in modernising the companies’ law in the area of e-governance and enhanced accountability amongst the various stakeholders.”
It added that this would help improve efficiency and increase accountability within the corporate sector.
“The new ideas like Class Action suits, CSR disclosure, fixed term for independent directors and one person company as well as strengthening the provisions to check fraud, tighten laws for raising money will make the Company law in line with the best global practices,” it added.
Introduced in the wake of the Rs 14,000-crore Satyam fraud, the fresh Bill proposes to enhance the accountability of companies, seeking greater disclosure and protection of investors and minority shareholders, the Statement on Objects and Reasons of the Bill said.
The was first introduced in August 2008, but had to be withdrawn because of dissolution of Lok Sabha. It was again introduced in Parliament in 2009 and sent to the Standing Committee, which presented its report in August 2010.