Cos Bill To Cover Offences By Govt Nominees: Fm

Outsider directors to feel the heat of new corporate governance regime

Finance minister P Chidamba-ram yesterday indicated that the law will be tightened and directors, including government nominees, on the board of companies made culpable for corporate misdemeanour

Addressing a seminar on the draft Companies Bill, 1997, the finance minister said, The bulk of corporate governance should be on the basis of self-regulation. Directors, including government nominees, are not ornaments. Those who dont take their task seriously will have to pay the price of culpability.

He said the economic reforms initiated in 1991 had opened up a host of business opportunities. New opportunities have opened up for those who wish to express their entrepreneurial skills as well as those with doubtful entrepreneurial skills who would like only to exploit, he said. The seminar was hosted jointly by the Institute of Companies Secretaries of India (ICSI) and Indian Cost and Works Accoun-tants of India (ICWAI).

 

The government will move the bill in the monsoon session of Parliament and Chid-ambaram said he had cleared in principle a review every five years.

The minister was of the view that there is an exaggerated emphasis on regulation and not so much actual implementation of rules.

If all the statutes were implemented there wouldnt be such glaring instances of corporate misbehaviour, he said.

What is lacking in India is the will to punish. It is essentially a punishment free society, he said.

Arguing that it was a difficult task to draft a companies bill in a rapidly changing scenario, Chidambaram said, We must recognise that no country can regulate over 400,000 companies. Most of them do not file returns or pay income tax.

The minister also appealed to the gathering to evolve a code of ethics and not to approach the draft companies bill from the point of view of employment.

If you do so you are missing the wood for the trees. You have to earn your place in the system with professional competence, he said.

]Punishment for professional breach of ethical standards should be swift and certain. So, I urge you to recommend a method of punishment, he said.

Earlier, department of company affairs secretary T S Krishna-murthy, said the government would finalise its view on the suggestions by the end of June and then formalise the bill to be presented in Parliament in the monsoon session.

I would like to dispel the notion that the role of cost accountants or company secretaries has been diluted. The consideration that went into the changes was to ensure more independent professionals rather than as employees of the company, he added.

In his opening address, ICWAI president N P Sukumaran said, The draft bill has diluted the existing cost audit provision.

This implies that it will eventually affect the competitiveness of Indian industry.