The government on Saturday said that a new companies bill to be introduced in the country will be clearer about the role and accountability of independent directors on the board of companies.
The role of independent directors had come under much scrutiny after the Satyam debacle.
“It (new Companies Bill) will be more objective, it will give a balanced approach to both the role of independent directors and their accountability. The attempt is to make it more unambiguous and explicit,” Corporate Affairs Minister Salman Khurshid said at a function organised by CII here.
The new bill, he said, is looking at the entire structure of responsibility of independent directors on the board of companies.
Besides, the bill aims at protecting the independent directors so that they are not accused of the things they have not done.
“We are reassuring people (independent directors) that we are concerned and we will respond to their concerns if they are accused of doing what they are not doing,” Khurshid said.
After the Satyam Computers fraud shot into limelight and the independent directors were questioned, many independent directors in other companies left their respective companies.
Knee-jerk reaction
Khurshid, however, said that it was an initial knee-jerk reaction and that the government has “repeatedly reassured that we are concerned.” And before the bill is finally passed by Parliament there will be remedy for any ambiguity on the issue, he said. The government hopes that provisions in the new bill will afford greater protection to shareholders, make disclosure norms stricter in the wake of the Satyam Computer Services scam, allow formation of one-person company and help India Inc compete more effectively globally. At the moment, two people are required to form a private limited company and seven for constituting a public limited company.
“The attempt is to make it as unambiguous and explicit as possible,” said Khursheed.
The government, he said, was also looking at pending corporate cases in courts and would devise a mechanism for speedier dispensation of justice.
“There is a need to expedite judicial verdict. We are trying to address that in the new bill,” said Khursheed who also oversees the minority affairs ministry. The minister also called for lesser government intervention in the private sector and said decisions like capping executive pay was the democratic right of shareholders.
“I think there has been too much governmental interference in the past. Let the shareholders decide what they want to do,” Khursheed further added.
