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
.
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