LS passes Companies (2nd Amendment) Bill

NEW DELHI: The Lok Sabha on Tuesday approved a Bill enabling cooperative institutions to voluntarily transform themselves into companies enabling them to compete with other enterprises on a competitive footing.
Replying to the discussion, Finance Minister Jaswant Singh said "It was purely voluntary for a cooperative to convert itself into a company and those which want to reconvert to a cooperative, there is a specific rule."
He said member equity cannot be publicly traded, but may only be transferred with the approval of the producer company''s board of directors. Producer companies would not be vulnerable to the takeover by multinationals or other companies.
The new form of company is designated as "producer company" to indicate that only certain categories of persons can participate in the ownership of such companies, he said.
The Companies (Second Amendment) Bill was approved by a voice vote.
Participating in the discussion, Priya Ranjan Dasmunsi (Cong) expressed apprehension that the legislation would allow the MNCs to come and take advantage.
In fact, the legislation was a step towards allowing foreign direct investment, he said.
Opposing the legislation, Moinul Hassan (CPI-M) said the new Bill would dismantle the cooperative movement in the country.
Vijay Pal Singh and BK Deo (both BJP) supported the Bill saying it would help boost the functioning of cooperative societies which could be converted to Companies.