The Bill will have substantial and significant provisions regarding corporate social responsibility, protection of minority shareholders and redefinition of promoters. The Government will incorporate certain additional provisions in the proposed Companies Bill on the basis of the report submitted by the Parliamentary Standing Committee on Finance this week.
The Union Minister for Company Affairs, Mr Salman Khurshid, told reporters at a function organised by the Bengal National Chamber of Commerce & Industry here that though the committee had made general endorsement of the draft Bill, it recommended several additional provisions and suggested framing of rules under the proposed legislation.
Mr Khurshid explained that the recommendations were additive in nature and not amendments. The Ministry has to draft the additional provisions and introduce new rules before the draft legislation is placed for passage in the Houses.
Code for independent directors
The Minister said that among the additional provisions would be a code for independent directors.
The Standing Committee, headed by the former Union Finance Minister, Mr Yashwant Sinha, wanted independent directors of the companies to follow a code of conduct drawn up in the Bill itself.
They will have to familiarise themselves with the proposed legal provisions regarding the ambit of their responsibilities and rights. They also have to make declarations that they are ready to discharge their responsibilities before taking up position on a company’s board.
Independent directors will be required to adhere to certain general and specific caveats, the Minister said.
Rotation of audit firms
The panel also suggested additional provisions regarding rotation of statutory audit firms and protection of whistle blowers, the Minister said.
The Ministry will also incorporate suggestions of the panel regarding accounting and auditing standards and managerial remuneration.
The Minister said the Bill will have substantial and significant provisions regarding corporate social responsibility, protection of minority shareholders and redefinition of promoters.
The Minister indicated that the whole exercise would involve “a lot of work” and the Bill may not be discussed in the winter session of Parliament scheduled to begin on November 8.
He hoped that by early next year, the new Companies Act should be a reality, replacing the Act of 1956.
The recent corporate developments, including those related to Satyam and Union Carbide, prompted the Government to redraw the corporate laws of the country.
The draft Bill was placed before Parliament in 2009. The Standing Committee, which earlier was headed by the former Union Human Resource Minister Dr Murli Manohar Joshi, overshot its timeframe in preparing its report.
The drafting of revisions and additions proposed by the Standing Committee would start soon the Minister said and then after the Cabinet approval for the new proposals, the revised Bill would be ready for discussion and eventual passage by Parliament.
IANS adds: Mr Khurshid told reporters on the sidelines of the 38th National Convention of Company Secretaries here that the directive of the Supreme Court on a curative petition on the Bhopal gas tragedy will have to be “factored in” within the proposed Companies Bill .
“The curative petition filed by the CBI is before the Supreme Court, and whatever comes from the Supreme Court has to be factored in the Bill as we need to have guidance on criminal liability of directors,” he said.
“I don’t know how long that will take. Since the Supreme Court is looking into the matter. We will have to wait for it,” he said, adding that there were a few challenges that still remained unresolved in the 1984 Bhopal tragedy that left 5,295 dead and 568,292 injured.