New Companies Act to address role of non-executive directors: M Veerappa Moily

KOLKATA: The proposed new companies law would address concerns raised by corporates about directors on their boards being penalised inspite of having no involvement in day to day operation, Corporate Affairs Minister M Veerappa Moily today said.

He said he would also look into the possibility of issuing a clarification on the role and responsibilities of independent and non-executive directors under the existing Companies Act, till the proposed new law took effect.

Moily was reacting to complaints by companies that they were finding it difficult to find independent, non-executive directors on their boards who fear penalisation over issues not related to day to day administration.

Replying to questions in the Calcutta Chamber of Commerce, Moily said he would not react to the specific case of AMRI as it was sub-judice.

However, he accepted as a principle that the directors not "responsible" for day to day operation should not be penalised and said the new companies law would address the issue.

Moily said the new Companies Bill would impart clarity and certainty to the law governing the non-executive and independent directors, which would help them make decision on joining a company board.

Moily said a new Competition Policy and new Companies Bill were likely to be placed during the budget session of Parliament.