"It is our responsibility to pass the Companies Bill so that in the modern times they get an opportunity to progress fast. We want to implement the bill fast. We are committed to it", he said while talking to reporters on the sidelines of India Leadership Conclave organised by Assocham and Wockhardt Foundation. The government introduced the Companies Bill 2009 in August in the Lok Sabha which seeks to replace the earlier law which was enacted in 1956. Pointing out that the bill is pending before the Standing Committee, Khursheed said, "People can put their views before the committee. Based on their suggestions, further steps would be taken."
Answering questions on the issue of CEO's salary, the Minister said, "We want that as far as possible, decisions pertaining to the company should be taken by the shareholders. I understand that all these matters would be discussed in the Standing Committee." Besides other things, the new law provides for incorporation of single person companies and shift from control to regulation.
The proposed Bill has 480 sections compared to over 600 sections in the Companies Act, 1956, and provides for greater shareholder democracy and less government intervention. The new legislation will try to promote shareholders democracy with protection of rights of minority shareholders, responsible self-regulation with adequate disclosure and accountability and lesser government control over internal corporate processes, said a statement of objects and reasons of the new Bill.
It will also make it mandatory for listed firms to have 33 per cent independent directors, while empowering the government to provide a simpler compliance regime for small companies. The Bill also proposes to make stringent provisions for companies seeking to raise money from the public. They would not be allowed to raise deposits from the public without obtaining permission from the relevant regulator.
There will be a single forum for approval of mergers and acquisitions, whether domestic or with foreign entities. Also the procedure for merger of holding and wholly-owned subsidiaries would be shortened. The bill also seeks to prohibit insider trading by company directors or key managerial personnel. Such activities will be treated as a criminal offence.