Date:07/02/2005 URL: http://www.thehindubusinessline.com/2005/02/07/stories/2005020701910500.htm

Back `New company law will clearly mark areas of jurisdiction'

Jayanta Mallick

Kolkata , Feb. 6

THE new company law provisions, which will be integrated in a Bill to be piloted in the monsoon session of Parliament, will outline the ambit of other regulatory statutes, enactments and regulatory authorities regarding companies.

Ms Komal Anand, Secretary of the Ministry of Company Affairs, told Business Line that to clear the confusion over the regulatory turf, the new company law would supersede all other laws for the corporate sector.

"The provisions of the new company law would be designed in such a way that the jurisdiction of several regulators in the corporate space is clearly delineated. There is a need to end the overlapping of and conflict between regulations for companies," she said.

"Though the Government has not formed a final view on the issue, a consensus is emerging that the new Companies Act will be the mother legislation and other legislation will take off from where the basic company law ends."

If and when put into place, this would mean that independent and statutory regulators (such as SEBI, RBI, TRAI) would not be allowed to frame regulations not in consonance with the company law, Ms Anand said.

There are numerous instances where regulations prescribed by independent regulators were seen to be in conflict with the Companies Act of 1956, she added.

As the proposed legislation would be a new Act, the old Act of 1956 would be repealed.

To reduce procedural problems, the Government also intends to reduce the number of sections to 289 from the current Act's 781.

The rules under the new law also would be simplified.

"However, the penal provisions, particularly the financial penalties, would be marked up to meet valuation of the time."

Meanwhile, the expert committee headed by Dr J.J. Irani has drafted the rules under the new law. "This would be put up on the department's Web site from Monday for a month to elicit the response of stakeholders."

The Ministry of Company Affairs is seriously considering separate legislation for limited liability partnerships. Confirming this, Ms Anand, however, said that a firm decision would be taken later. The Partnership Act does not provide for limited liability of partners.