Companies Bill in budget session: Centre

 “We will bring it before Parliament in the budget session. We just met the industry to take their final view. We have to take into consideration the industry’s view as well as that of a Parliamentary Standing Committee,” Corporate Affairs Secretary D K Mittal told reporters here after meeting industry representatives. He also expressed confidence that bill will not lapse this time. The bill lapsed in 2008 when Parliament went for elections, he said, adding that “it did not lapse because we did not pursue it.”

The bill, which seeks to delegate a greater responsibility to independent directors in a company, came against the backdrop of the multi-crore rupee accounting fraud in Satyam Computer Services. The 2008 scam exposed loopholes in the existing corporate governance norms and highlighted the need for stricter rules. The bill, if passed, will to protect rights of minority shareholders, bring about responsible self-regulation with adequate disclosure and accountability, and lesser government control over internal corporate processes.

The Companies Bill (2008), which lapsed with the dissolution of the 14th Lok Sabha, was reintroduced in the Lok Sabha in August 2009. Subsequently, in August 2010 the Parliamentary Standing Committee on Finance gave its report after examining the provisions of the law. The  parliamentary panel has suggested capping the number of Boards an individual can be part of to five, and 10 in case of unlisted firms.

It also suggested that salaries of chief executives should be capped and shareholders should have a say in managerial remuneration.

The panel has asked the corporate affairs ministry to develop a “rational formula” for managerial remuneration.

The Department of Telecom (DoT) had earlier asked corporate affiars ministry for shareholding pattern of Swan Telecom (now Etisalat DB), which is alleged to be the front company of Anil Ambani Group company RCom. However, in its report to DoT, MCA said RCom never had more than 9.90 per cent stake in the company while guidelines said the threshhold limit for cross holding is less than 10 per cent.