Chambers welcome paper on firms' law

Both the industry chambers, Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce and Industry (Ficci) have welcomed the government's move to condense, simplify and rationalise the provisions of the Company Law and replace the existing 781 sections and 15 schedules with only 289 sections and a few schedules.

CII welcomed the move and thanked the Ministry of Company Affairs for placing a model codified law for discussion and debate and said that this was an important step towards greater transparency and openness.

"This will give industry an opportunity to discuss the recommendations of the paper and give its feedback, which we hope will be incorporated in the Bill as and when it is introduced in Parliament. CII will closely look at all the provisions of the codified law presented in the concept paper and we will submit our detailed recommendations to the Ministry of Company Affairs," Sunil Kant Munjal CII president said.

Ficci said that with the fast pace of business environment, there is a need to continuously liberalise, de-regulate and simplify laws governing the corporate sector. The concept paper marks a turning point in the process of Company Law reforms, it said.

However, Ficci said that the government should reduce the compliance requirements for small and private limited companies. It is important that a separate law should be enacted for such companies.

If this is not possible, then in the newly drafted Companies Act, a separate chapter should be provided for small and private limited companies.

The paper is also in line with Ficci's suggestion that the broad framework and details relating to business operations should be left to be evolved by corporates themselves in consultation with and consent of shareholders.

The concept paper provides that the particulars furnished at the time of incorporation of companies are insufficient to clearly establish the identity of the promoters especially in the case of vanishing companies.

The concept paper proposes to strengthen the requirement of particulars at the time of incorporation of companies. This was a step in the right direction, FICCI said.

The amendments in the provisions pertaining to issue of securities, capital and related matters, public deposits, registration of charges, meetings and resolutions, dividend, investor education would also help in bringing our companies act at par with similar laws prevailing in other developed countries, the chamber said.