'Draft bill to change Companies Act in a couple of weeks'
The Company Affairs Ministry has it would prepare a first draft bill to amend the Companies Act, 1956 on the basis of J J Irani Committee report in a couple of weeks so that the final bill can be tabled in the winter session of Parliament.
By PTI |
NEW DELHI: The Company Affairs Ministry has it would prepare a first draft bill to amend the Companies Act, 1956 on the basis of J J Irani Committee report in a couple of weeks so that the final bill can be tabled in the winter session of Parliament.
"The draft bill will then go for inter-ministerial consultations before given a final shape by the Law Ministry," Company Affairs Minister Prem Chand Gupta said.
After that, it would go to the Cabinet for approval, he said.
Gupta reiterated that the bill would be tabled in the next session of Parliament.
When asked whether clause 49 of the listing agreement, which suggests all listed entities with executive chairman to have at least 50 per cent of independent directors in the board, was contradicting the Irani Committee's view that strength of independent directors be one-third of the board's size, the minister said there was no contradiction between the two requirements.
The listed companies enter into shareholders agreement with SEBI and there was nothing wrong if SEBI calls for more independent directors than suggested by the Irani Committee.
The contradiction arises only if SEBI insists for less number of independent directors than asked by the Company Affairs Ministry, he said.
SEBI has set a deadline of December 31 this year for listed companies to increase the number of independent directors as per the revised clause 59 of the listing agreement, which also says that companies with non-executive chairman can have at least one-third of the board as independent directors.
However, Irani Committee makes no difference between the companies having executive chairman and non-executive chairman in this respect.
The issue assumed significance because the committee said that in the first place the requirement of independent directors be extended to listed entities, which are basically regulated by SEBI, and the companies which accept public deposits.
Gupta refused to divulge any details on the ministry's final view on the Irani Committee report on any issues, including the number of independent directors as the first draft is still being prepared.
The government has started the process of preparing the draft on amending the Companies Act after taking feedback from industries and other stakeholders on the committee report.
Bodies like FICCI have called for reducing the number of independent directors to 25 per cent of the total board members. In fact, overwhelming number of CEOs and MDs, surveyed by Assocham also took the same line.
Besides, the number of independent directors, the committee also made suggestions on classification and registration of companies, minority interests, investor education and protection, access to capital and mergers and acquisition.
The Irani Committee was set up to give suggestions on the feedback from the stakeholders to the concept paper floated by the Company Affairs Ministry for amending the Companies Act, 1956.
After reforms process started in 1990s, a need was felt for a comprehensive review of the Companies Act, 1956. Unsuccessful attempts were made in 1993 and 1997 to replace the present Act with a new law.
"The draft bill will then go for inter-ministerial consultations before given a final shape by the Law Ministry," Company Affairs Minister Prem Chand Gupta said.
After that, it would go to the Cabinet for approval, he said.
Gupta reiterated that the bill would be tabled in the next session of Parliament.
When asked whether clause 49 of the listing agreement, which suggests all listed entities with executive chairman to have at least 50 per cent of independent directors in the board, was contradicting the Irani Committee's view that strength of independent directors be one-third of the board's size, the minister said there was no contradiction between the two requirements.
The listed companies enter into shareholders agreement with SEBI and there was nothing wrong if SEBI calls for more independent directors than suggested by the Irani Committee.
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The contradiction arises only if SEBI insists for less number of independent directors than asked by the Company Affairs Ministry, he said.
SEBI has set a deadline of December 31 this year for listed companies to increase the number of independent directors as per the revised clause 59 of the listing agreement, which also says that companies with non-executive chairman can have at least one-third of the board as independent directors.
However, Irani Committee makes no difference between the companies having executive chairman and non-executive chairman in this respect.
The issue assumed significance because the committee said that in the first place the requirement of independent directors be extended to listed entities, which are basically regulated by SEBI, and the companies which accept public deposits.
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Gupta refused to divulge any details on the ministry's final view on the Irani Committee report on any issues, including the number of independent directors as the first draft is still being prepared.
The government has started the process of preparing the draft on amending the Companies Act after taking feedback from industries and other stakeholders on the committee report.
ADVERTISEMENT
Bodies like FICCI have called for reducing the number of independent directors to 25 per cent of the total board members. In fact, overwhelming number of CEOs and MDs, surveyed by Assocham also took the same line.
Besides, the number of independent directors, the committee also made suggestions on classification and registration of companies, minority interests, investor education and protection, access to capital and mergers and acquisition.
The Irani Committee was set up to give suggestions on the feedback from the stakeholders to the concept paper floated by the Company Affairs Ministry for amending the Companies Act, 1956.
After reforms process started in 1990s, a need was felt for a comprehensive review of the Companies Act, 1956. Unsuccessful attempts were made in 1993 and 1997 to replace the present Act with a new law.
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