Amid the ongoing controversy over 2G spectrum scam and lobbying, Corporate Affairs and Minority Affairs Minister Salman Khurshid today said the government would introduce a corporate- and people-friendly companies Bill in the Budget session. In his address at the CII Corporate Governance summit, the minister said his ministry would consider opinions from a wide spectrum of business and stakeholders.
The Bill sets a cap on the number of directorships an individual can hold, as well as prevents a subsidiary (of a company) to have another arm. The Parliamentary Standing Committee had recommended that a provision be made in the Bill for rotation of independent directors by restricting their tenure in a company to, say, five years. The Bill may have provisions relating to corporate social responsibility (CSR).
Khurshid said the government must trust companies and companies need to trust the government. “You cannot get a society that moves fast and grows, unless you have mutual trust. Sadly, as it stands, trust is lacking. You have to provide for an honest mistake if you trust each other. Defaults must be accounted for in a transparent manner, but somewhere there must be a clear dividing line between honest mistake and a default,” he said.
Talking about the importance of the corporate sector, Khurshid said: “You have got to convert something that is seemingly bad into something good. That is what corporate governance is all about and the ministry is there to help. Everything that you use in your life comes from the corporate sector, so to be cynical about it is to be hypocritical and is a great disservice to the country.”
Corporate Affairs Secretary R Bandyopadhyay outlined the objective of his ministry, saying: “We had taken two mottoes of working. First was that we must not do anything that will hinder the growth of the corporate sector. Second, growth has to be inclusive. Most people believe that corporate governance is only for the growth of 2 to 4 per cent of the nation. There is a need to include more so that they have a stake in the growth of the corporate sector,” he added.
CII National Council on Corporate Governance Chairman Rahul Bajaj argued against excessive regulation and advocated more voluntary practices. “Most of the best corporate governance practices that you see are voluntary. Also, India has one of the best global standards when it comes to norms, guidelines and standards in many aspects of corporate governance. But, the proposed regulatory regime as it stands now and the Companies Bill, if sent to Parliament with the recommendations of the standing committee, would seriously encumber management of business,” Bajaj said.