Govt mulls revision of Companies Act

The Government is considering a comprehensive revision of the Companies Act, 1956 to enable the corporate legal framework to be more effective in the emerging economic environment, Lok Sabha was informed today.

While preparing proposals for the new legislation, the requirement of reasonableness, appropriateness and effectiveness of penalties in the context of the gravity of the offence is being kept in view, Company Affairs Minister Prem Chand Gupta said in a written reply.

Provisions for suitable disclosures with requisite transparency are being examined to ensure that the proposed law enables self-regulation with accountability, he said.

In addition, the e-governance project of the government -- MCA-21 -- would further facilitate easy access to information pertaining to the companies, the minister said.

Legislative proposals are being prepared in the form of a comprehensive Companies Bill that would be introduced in Parliament in due course for consideration, he said.

Gupta said the government had set up a committee under the chairmanship of noted lawyer O P Vaish to suggest how to streamline the process of correcting erring companies.

At present, 45,000 cases are pending in courts and of these, 16000 relate to minor technical issues, he said.

The average penalty is about Rs 2247 and it takes between five and 20 years to resolve such cases, the minister said.

To a question about corporate governance in listed companies, Gupta said the cases of listed companies are taken care of by SEBI.

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