Cabinet likely to take up Companies Bill tomorrow

NEW DELHI: The Cabinet is likely to take up the new Companies Bill tomorrow, as differences over market regulator Sebi's jurisdictions have been ironed out between the Finance Ministry and Ministry of Corporate Affairs (MCA).

Cabinet approval on the Companies Bill, 2009 was pending as the Finance Ministry and MCA failed to reach a common ground on powers to be delegated to the Securities and Exchanges Board of India (Sebi) in case of regulatory overlaps.

Finance Minister Pranab Mukherjee, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Corporate Affairs Minister Veerappa Moily were asked to discuss and iron out issues. The ministers have come to a consensus on the issue, sources in the know said.

According to them, the Finance Ministry and Sebi have sought review of the provisions which conflicted with the Sebi Act. Apparently, it has been decided that Sebi's view will be upheld in cases where jurisdictions conflict.

The Bill has already been vetted by the Parliamentary Standing Committee of Finance and also by different ministries.

For the first time, the Bill has introduced ideas like Corporate Social Responsibility (CSR), class action suits and a fixed term for independent directors.

Among other things, it also proposes to tighten laws for raising money from the public. The Bill also seeks to prohibit any insider trading by company directors or key managerial personnel by treating such activities as a criminal offence.

Further, it has proposed that companies should earmark 2 per cent of the average profit of the preceding three years for CSR activities and make a disclosure to shareholders about the policy adopted in the process.

The Companies Bill, 2008, which lapsed with the dissolution of the 14th Lok Sabha, was re-introduced in August 2009.