New Cos Bill To Boost Investor Confidence

The government aims to achieve the twin objectives of promoting healthy corporate growth and boosting investor confidence while giving final shape to the new Companies Bill.

Stating this, T S Krishnamurthy, secretary in the department of company affairs, said, However, what worries the government is the record of failures in the corporate sector which erodes the confidence of investors.

The final Bill, to be placed in Parliament in the coming monsoon session, will have new features which will help the Indian corporates compete in global markets, he told a workshop on Draft Companies Bill, 1997 organised by the PHD Chambers of Commerce and Industry (PHDCCI) here.

 

Responding to criticisms of certain provisions in the draft Bill, Krishnamurthy said these clauses should not be turned down at the onset itself and should be given a fair trial as they are being introduced for the first time.

However, he assured industry that if these clauses needed to be amended in the light of the changing economic scenario, the government would look into it and do the needful as and when required.

Krishnamurthy said the new Bill will try to reduce government control in running the business and added that approvals required had already been reduced from 40 to 22.

He said in a system of low government interference disclosure of information to investors becomes important.

According to him, no amount of legal regulation will make good corporate image and he added that discussion on corporate governance has also realised need for self-regulation.

In a self regulation era complaint of investors should be highlighted to the chief executive of the company and the new Bill will try to include such provision where board of directors of the company will have to mention in the annual report the action taken against investors complaint, Krishnamurthy said.

He said the joint stock company as a business entity to promote economic growth has played vital role in India, as can be seen from the growth of joint stock companies from less that 5,000 in 1958 to around five lakh in 1997.

On the draft Bill, Krishnamurthy said the government will take note of various suggestions made by the corporate sector and give constructive and objective debate so that the final bill is acceptable.

Other speakers at the workshop were K S Mehta, chairman, corporate affairs committee, PHDCCI, and Vinod Chandlok, chairman, direct tax committee, PHDCCI.