Centre's directive on defaulting PSUs

By Our Legal Correspondent

NEW DELHI, OCT. 7. The Centre has addressed letters to the Chief Secretaries of various States asking them to persuade the board of directors of defaulting Public Sector Undertakings (PSUs) in their States to file necessary returns to the Department of Company Affairs, failing which action would be taken against these PSUs.

Disclosing this to mediapersons, the DCA secretary, Dr. P. L. Sanjeev Reddy, said the Company Law Settlement Scheme was applicable to all the registered companies, including State and Central PSUs as well to those companies facing proceedings before the BIFR.

As many of the PSUs had failed to respond to the scheme under the pretext of recurring losses, the attention of the Chief Secretaries had been drawn to ensure that the PSUs furnished the relevant returns to avoid prosecution. ``We wanted to first set out house in order before we proceed against the other erring companies,'' Dr. Reddy said.

Explaining the steps taken by the DCA for qualitative improvement in corporate governance, he said there was a proposal to ask the companies to file abridged version of the balancesheet and the contents to be incorporated in it were being finalised.

The joint secretary, Mr. A. Ramaswamy, said steps were being taken by the DCA to ensure that the companies send their statutory returns and make necessary payments `online'. This would be possible after the Company Law Amendment Bill was passed in Parliament during the winter session.

Explaining the steps taken against defaulting companies and their directors, he said these companies and the names of the directors would be put on the department's website soon.

The financial institutions would be asked not to lend money to these companies or their directors. Also these directors would be disqualified to become directors of any other company for the next five years. Mr. Ramaswamy also said information would also be furnished to the Registrar of Companies (RoC) to keep a vigil during registration of fresh companies to ensure that the names found in the `disqualified list' did not figure as Directors of new companies.

Under the fast track exit scheme about 60,000 companies were likely to be deleted and the department's endeavour would be have control only with ``active players in the field'' for better corporate governance in the context of emerging globalisation and WTO regime, Mr. Ramaswamy said.

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Section  : National
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