Do not modify company’s Bill, Irani urges govt

Discussion in 'Co bill 2008' started by jansi, Mar 28, 2014.

  1. jansi

    jansi Member

    The corporate fraud at Satyam does not merit a toughening of the provisions of the companies Bill by Parliament, according to JJ Irani, chairman of the expert committee on Company Law Amendment Bill. Speaking to FE, Irani said the incident has created a blot on the country’s corporate image. But the Bill, at present before the standing committee of finance, has already incorporated several new checks-and-balances, many of them based on the recommendations of his committee. Any hasty reaction could therefore rebound on the investment climate in the country, he added. “There should be no knee-jerk reaction to the Satyam scandal. Though this is a gross anomaly, our reaction to it should be measured. The way to go forward is not to bring in more stringent laws, because that way we can end up with what happened in the United States in the aftermath of the Sarbanes-Oxley Act, enacted in response to the Enron scandal. Thanks to Sarbanes-Oxley regulations, many firms chose to delist themselves from the New York Stock Exchange and instead got themselves listed on the Luxembourg Stock Exchange,” he said. According to Irani, while stringent measures act as a deterrent for the good and abiding companies, the bad ones still find ways to dodge the regulations. Irani, who is also the chairman of the board of governors of Indian Institute of Management Lucknow, was in the city to attend Manfest, the business conclave organised by the students. The comments by the former managing director of Tisco are significant as minister for corporate affairs Prem Chand Gupta had said last week that “there is a case for re-looking at certain provisions of the Bill to enable the government to take swift and more effective action in cases of large scale fraud”. Irani said though the government is hopeful of facilitating its passage in Parliament, he was not sanguine. “I have my doubts over its passage,” he said. His panel had recommended appointment of a second auditor, at the cost of the company, to check on the first auditor’s report. That clause, would, in itself act as a very strong deterrant for any accounting firm, he noted. The new companies Bill, aims to increase transparency in the functioning of corporates and fix accountability of key officials of the company towards shareholders. It is half the size of the the 52 year old Companies Act, 1956. The Bill is now in the Rajya Sabha. –

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