GOVERNMENT OF INDIA
MINISTRY OF COMPANY AFFAIRS
PRESS NOTE – 03/2005
Subject : Presentation of the Report of the Expert Committee on Company Law by Dr. J.J. Irani, Chairman of the Expert Committee
Government had undertaken an exercise to comprehensively revise the Companies Act, 1956 to enable a simplified compact law to replace the existing Act, that would address the changes taking place in the national and global economic scenario, enable adoption of internationally best practices as well as provide adequate flexibility for timely evolution of new arrangements to meet the requirements of the corporate sector in India. It has been the intention of the Government that this exercise is consultative in nature and takes into consideration the needs and views of various stakeholders.
Accordingly, on August 4, 2004 the Ministry of Company Affairs had published a Concept Paper on Company Law on its website to enable a broad-based examination of various Company Law issues requiring revision. A large number of comments and suggestions were received on the Concept Paper. Later, on December 2, 2004, the Government constituted an Expert Committee on Company Law under the Chairmanship of Dr. J.J. Irani to make recommendations on :
a. Issues arising from the revision of the Companies Act, 1956.
b. Responses received from various stakeholders on the Concept Paper.
c. Bringing about compactness by reducing the size of the Act and removing redundant provisions;
d. Enabling easy and unambiguous interpretation by recasting the provisions of the law;
e. Providing greater flexibility in rule making to enable timely response to ever-evolving business models;
f. Protecting the interests of stakeholders and investors, including small investors.
g. Any other issue related, or incidental, to the above.
The Expert Committee comprises of experts drawn from trade and industry associations, professional bodies and institutes, chambers of commerce, leading senior advocates and auditors. Representatives of Government Departments, regulatory bodies and other organisations were included as Special Invitees. The Committee deliberated on various issues on Company Law requiring a review on the basis of comments and suggestions received in response to the Concept Paper, opinions expressed by experts, professional bodies etc. The Committee held as many as 17 full sessions over a period of six months and after intensive study of issues undertaken by the members individually and in groups, submitted its report on May 31, 2005.
The Report comprising of thirteen chapters divided into seven parts addresses a range of issues including a perspective on the scope of Company Law, the issues concerned with classification and registration of companies, measures to make the governance in companies more accountable and transparent, measures to be taken in respect of proper disclosure of related party transactions and minority interests, a comprehensive view on the range of issues necessary for enabling protection of small investors, changes desirable in the regime governing access to capital, maintenance of accounts and conduct of audit of companies, ways and means of making the process of mergers and acquisitions more efficient, effective investigation and prosecution for company offences with proper focus on officers in default and providing a model, balanced and efficient regime for addressing corporate insolvency.
The recommendations of the Committee are expected to provide a valuable input in the preparation of new Company Law. The Report of the Expert Committee will be available for viewing on the website of the Ministry of Company Affairs .