The Standing Committee of Parliament which thoroughly examined The Companies Bill, 2009, has observed that the words “As may be prescribed” has been used in the Bill approximately 235 times, thereby suggesting excessive role and scope for delegated legislation. As the Standing Committee on Finance (SCF) in its Twenty-First Report, presented to the Parliament recently, was of the view that several matters, requiring substantive provisions were left for rule making, it advised the Ministry of Corporate Affairs to reconsider the provision made for excessive delegated legislation.
Accordingly, the Ministry of Corporate Affairs has agreed to shift some of the rule making provisions for inclusion in The Companies Bill, 2009 itself in respect of 25 clauses which include definition of small companies [clause 2 (1) (zzzg)]; manner of subscribing names in the Memorandum of Association [clause 3 (1)]; prescription of time to refund share application money [clause 35 (3)]; provisions and time limit for further offers of shares, their acceptance and renunciation etc. [clause 56 (1)]; matters into which the auditors shall enquire while conducting audit [clause 126 (1)]; time limit for filing of consent by a person to act a director [clause 133 (5)]; maximum number of persons for formation of association or partnership [clause 422 (1)].
The SCF has recommended that the afore-mentioned provisions for delegated legislation or rule making, as agreed to by the Ministry, may be appropriately incorporated in the Bill. But, at the same time the SCF has emphasized that simple procedural aspects which may require flexibility and periodic revision depending on time-period or economic circumstances should continue to remain in the domain of delegated legislation.