DCA may post names of erring directors on its site

NEW DELHI: The Department of Company Affair’s working group on corporate governance may recommend posting of the names of the directors violating various laws on the department’s website.
The group has also proposed to recommend barring such directors from holding directorships for one-two years. Similar debarring is in vogue in countries such as France and the UK.
The report, currently being finalised, has also said that the levels of disclosure to be made by a company should be determined by the extent of public interest in that company. To this end, the report would recommend categorisation of companies as those with ‘direct public interest’ and ‘indirect public interest’.
A company — irrespective of whether it is a public company or a private company — would be held as having direct public interest if it has accepted deposits from the public or has issued debentures to individuals. The public interest would be deemed as indirect if the money was lent by another company which has public interest, or if the money lent had in the first place been borrowed from a bank or financial institution.
All other companies — which do not fall into the category of those with direct public interest or indirect public interest — would have to ensure compliance with all laws and norms as is required at present.
The group chaired by Institute of Company Secretaries of India’s president, Pawan Kumar Vijay, is expected to submit the report to the government in the second week of February.
At present, the Companies Act, 1956, under section 274 (1)(g), debars directors of companies that have defaulted in repaying depositors money from taking up new appointments. The report may also suggest that companies should make disclosures in their annual reports on the amount of loan extended to the directors.