An internal committee of the department of company affairs has recommended splitting the Companies Act, 1956 into three separate laws.
It has proposed a separate legislation for smaller companies with the aim to minimise government intervention, while another law for listed and public limited companies should be enacted and the third law should look at issues like winding up and reconstruction.
The committee headed by RD Joshi, set up to examine the provisions of the Companies Bill, 1997, has also proposed an increase in the maximum number of partners from 20 to 50 for firms of professionals like chartered accountants and company secretaries, advocates and other professions governed and regulated by Parliament.
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It has further recommended that company secretaries and auditors should be treated at par under the provisions of the Companies Act with a view to ensure independence of the company secretary in whole-time practice for issuing compliance certificate to companies with paid-up share capital of not less than Rs 10 lakh and not required to appoint a whole-time secretary.
The report is at present being examined by DCA and it would seek changes to the Bill pending in Parliament, DCA secretary VK Dhall said earlier this week.
On the issue of separate legislation for listed and public limited companies, the committee has recommended emphasis should be given to higher disclosures, and responsibility towards investors.
"The Governments intervention in respect of these companies should be higher with the help of a strong monitoring and regulatory framework," the committee, which submitted its report recently said.
For smaller companies, it has proposed minimal government intervention. It has, however, not spelt out details.
The ministry of small scale industry is also processing a draft legislation for SSI units, which among other things looks at marketing and credit related issues.
Similarly, existing provisions in the Companies Act, 1956 relating to winding up, compromises, arrangements and reconstruction could be taken out and enacted as separate law governing the procedure relating to insolvency of corporates, the committee further said.
On increasing the number of members in partnership firms, the committee is of the opinion that the such restrictions are not imposed in developed countries and as a result there are several accounting and solicitors firms with international presence.
In the wake of GATS negotiations on professional services, Indian professionals will have to face competition from abroad under the WTO regime, the committee said.