New company law may make Sebi's powers more explicit
The company affairs ministry has initiated discussions with the finance ministry for a foolproof corporate regulatory regime by making Sebi’s powers more explicit in the proposed new company law and plugging the gaps in regulations.
By KG Narendranath & Gireesh Chandra Prasad, TNN |
NEW DELHI: The company affairs ministry has initiated discussions with the finance ministry for a foolproof corporate regulatory regime by making Sebi’s powers more explicit in the proposed new company law and plugging the gaps in regulations.
The company affairs ministry believes the new law should specifically provide for the capital market regulator to frame regulations under Section 30 of the Securities Contract Regulation Act with respect to issue and transfer of securities and non-payment of dividend.
Currently, the power to administer the provisions relating to them in the company law, are delegated to Sebi under Section 55A. These cover all listed public companies and those intending to get listed.
Experts say, while the changes could largely be procedural in nature, these reflect the government’s intention to facilitate the regulator to be more proactive.
Also, in a fast-growing economy, the regulator has to function from a position of strength, they said. The idea is also to harmonise the company law with Sebi’s regulations.
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The company affairs ministry has also discussed with the finance ministry recognising the concept of acquisition in the parent Act itself.“The idea seems to make the proposed new law recognise inorganic growth, which is emerging as an essential vehicle of growth these days,” said Ernst & Young director Rahul Roy.
It is also planning to define insider trading in the Act and distinguish it by a director from that by others. This is to take into account the fact that directors have greater access to price-sensitive information.
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