New Delhi, May 3 (UNI) Minister of state for Finance Pawan Kumar Bansal today underlined the need for bringing before Parliament, a comprehensive and modern Bill to amend the Companies Act in order to make Indian corporate more efficient and competitive.
Mr Bansal was speaking at the National Conference on Securities Market Regulations organised by the Federation of Commerce and Industry (FICCI) and Society of Indian Law Firms (SILF) here.
Mr Bansal said that while the Companies Act has been reviewed and the recommendations of the stakeholders incorporated to bring the provisions of the Act in tune with regulations the world over, ''unfortunately, the Bill has not come up for discussion in Parliament.'' He commended self-regulation as a potent force to embrace ethical standards beyond the requirements of government regulations and adoption of a preventive approach to managing market irregularities rather than a reactive policy after the outbreak of a crisis.
As for industry's demand for urgent implementation of the amended Section 138 of the Negotiable Instruments Act, which excludes non-executive directors from its ambit, Mr Bansal said, ''The law is quite clear. The government cannot do anything in the matter. It is for the courts to enforce the applicability of the amended provisions.'' In his keynote address, ICICI Securities Ltd MD and CEO S Mukherji pointed out that while Indian markets were amongst the best regulated in the world, there was need for greater integration with international markets in terms of capital flows, products and processes.
Strengthening of self regulatory organisations, he said, were critical for safeguarding markets, and called for introduction of new age financial products and harmonisation of regulations.
FICCI President Saroj Kumar Poddar suggested that SEBI should make a distinction in terms of defaults. Penal provisions cannot be uniform for all defaults and the penalty must be reasonable and commensurate with the gravity of default.
Further, there should be a distinction between economic offences and criminal offences.
He said, as per the existing norms, buyback of shares can be done only out of company's free reserves, securities premium account or proceeds of any earlier issue specifically made for buyback purposes. Moreover, companies are allowed to buyback their own shares up to 25 per cent of the paid-up capital and free reserves.
In case of buyback of shares, gains are subject to Capital Gains Tax because the transaction is not through the exchange and there is no incidence of Securities Transaction Tax (STT).
It would be in fitness of things to exempt even the buyback offers and put it on par with secondary market transactions, the FICCI Chief pointed out.
The conference was also addressed, amongst others, by SEBI Executive Director S C Das, MOCA Director Pawan K Kumar, Amarchand Mangaldas Managing Partner Shardul S Shroff and Luthra and Luthra Managing Partner Rajiv K Luthra.
UNI RA MP BD1940