Panel to 'circumscribe' wrongdoers: Moily

The Law Commission has been asked to circumscribe “key managerial personnel” on the boards of corporate entities directly in charge of day-to-day activities who can be legally hauled up for wrongdoings.

Disclosing this here on Tuesday, Union Minister for Corporate Affairs M Veerappa Moily said he had entrusted the commission with this task to clearly define “who should be pinned with responsibility” for acts of corporate malfeasance and negligence, a grey area of concern.

Speaking at a National consultation here, organised by his Ministry and the Institute of Chartered Accounts of India, Moily said this issue had acquired urgency in the backdrop of some recent incidents like the major fire in a private hospital (AMRI) in Kolkata which killed over 90 people.

Without commenting on the AMRI case as it is sub judice, Moily said several instances have cropped up of many directors resigning from the boards of various private companies when an omnibus criminal culpability provision was slapped on all directors for
serious wrongdoings by the firm.

Hence, there was a need for identifying “key managerial personnel” who could be pinned with responsibility for lapses by the corporate concerned, Moily said.

The ministry was examining whether it could also be incorporated in the new Companies
Bill which the UPA government hoped to pass in the coming Budget session of Parliament, he noted.

The new National Competition Policy should hopefully be launched by March-end, said Moily. A draft of it has already been submitted and a Cabinet note will be prepared shortly on the policy. Once it came into force it will help build a free, fair and healthier competitive environment in the country.

The National Competition Policy “is a tool that unleashes economic growth, creates jobs and lowers inflation by cutting unfair pricing,” argued Moily. The minister also batted for a new proviso that is contemplated in the Companies Bill to provide for reservation for women on the board of directors of companies.

The New Companies Bill in the offing will not result in a situation wherein the bureaucracy “will gain an upper hand”, as feared by some, posing greater administrative hurdles to do business in India. All stakeholders will be consulted before the bill became law.
Moily also clarified to the gathering that the idea behind setting up of the serious fraud investigations office was not to create another super police for the industry, but meant to focus on compliance.