Govt may dilute Cos Bill

NEW DELHI: The Companies Bill 2003 is awaiting Parliament’s nod and the news from Shastri Bhawan is that the government is willing to dilute some of the provisions that are seen ‘draconian’ and correct all the drafting errors. The exercise is close to being completed and a note is to be moved for the consideration of the Union Cabinet in the next few weeks. Incidentally, the Sebi directive to exchanges has taken not just the corporate sector by surprise, but also the officials at the DCA. A section of Corporate India has dubbed the Sebi directive as more harsh than those proposed in the yet to be passed Companies (Amendment) Bill 2003.
The amendments to clause 49 incorporates recommendations of the NR Naryana Murthy committee on corporate governance constituted by Sebi, a lot of which is similar to the recommendations made by the Naresh Chandra Committee on corporate governance. The amended clause 49 states that only those person who is not related to promoters or management at the board level or at one level below the board, or is not a supplier, service provider or customer of the company can become an independent director on its board. Also, a person cannot be appointed as independent director if he was employed with the company in any of the immediately preceding three years financial years.
Partners or executives of the statutory audit firm or internal audit firm, a legal firm or a consulting firm that is associated with the company is also not eligible to be appointed to as independent director to the company’s board. Past partners and executives of these professional firms would have to be observe a three year cooling period. Those holding 2% or more voting rights in the company are also ineligible to become its independent directors.