“The introduction of the long-pending Companies Bill has raised the hopes of India Inc to prepare itself to reinforce their strategy and reap the benefits of global competition,” said Vinod Nowal, President, Bangalore Chamber of Industry and Commerce (BCIC).
India being one of the top three emerging economies, has been longing for strong and cogent corporate laws that will enable the country’s international trade to conduct its affairs on a par with the western industrialised nations. The proposals in the Bill are expected to act as a catalyst to fostering growth of the economy. BCIC has welcomed the Union government’s initiative to introduce the Companies Bill 2011 which will enhance accountability and transparency among members of India Inc.
According to BCIC, some of the major provisions proposed in the new bill will have good impact. “Tenure of independent directors not exceeding two terms up to a maximum five years to be determined prospectively, the shortened definition of the term ‘relative’ of a director, rotation of auditor and other provisions to strengthen corporate governance, permitting outward amalgamation of Indian companies and short form merger of holding and subsidiary companies, providing statutory status to the Serious Fraud Investigation Office, with the powers to hand on severe punishments to the guilty, provision of a rotation policy of auditors/audit firms with a minimum cooling period of four years in between two fixed terms of four years each, are some of the aspects which will be good,” BCIC noted.
One of the main highlights of this Bill is that it proposes a mechanism for vigilance that will reward whistle blowers. BCIC also welcomes this measure as it will allow companies to follow transparency at every move they initiate.
While welcoming the introduction of the Bill, the chamber feels many provisions are left to the rules to be prescribed by the government. BCIC hopes that the government will frame the rules in consultation with industry associations and other stakeholders before the Law gets enacted.