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Corporate sector set to get more liberty

UNION MINISTER of State for Company Affairs Prem Chand Gupta said here on Sunday that Dr JJ Irani Committee had already submitted its report on company law reforms.

india Updated: Jun 19, 2006 01:29 IST

UNION MINISTER of State for Company Affairs Prem Chand Gupta said here on Sunday that Dr JJ Irani Committee had already submitted its report on company law reforms. 

The Central Government would pass a new company act in the Winter Session of Parliament, he said.

Besides reducing 786 provisions in the Company Act 1956, the new act would give enough freedom to the corporate sector, he added.

“Our stress is on self-regulation so that companies follow the law set by the government,” he said.Gupta was here to attend a meeting of the Rashtriya Gandhi Tailik Mahasabha.

Talking to media persons, he said that the new law was made so simple that even a layman could understand it. Responsibilities of the company directors, defined in the law, were left out in the previous act.

“The new law will be more user friendly and corporate sector will get a lot of opportunities in the country and abroad. We will also guard the interest of small investors. When stock market scam was unearthed, a large number of companies vanished with common man’s money,” he said.

“The Company Affairs Department has taken several measures to check such scams and the activities of the fly-by-night companies. We have already taken 20 directors into custody, and FIRs have been lodged against 100 directors. The department has also lodged 300 cases against various companies,” Gupta said.

“The Serious Fraud Investigation Office is inquiring into 34 cases of fraud. Final report regarding 16 cases has been submitted. We will take action against the culprits,” he said.

“At least 7 lakh companies have been registered with the Company Affairs Department but several of them are working merely on paper. We have
directed such companies to put up their shutters or face action,” he said.

In reply to a query, Gupta said non-banking companies were governed under the rules set by the Reserve Babn of India. “We are talking with the Ministry of Finance to constitute a separate law to check the the activities of non- banking finance Companies. The working of the investment companies will also be revamped,” he said.

“The act will also put the e- governance into practice,” Gupta added. He said that an inquiry was being conducted against Cyber Technology, a Lucknow- based company. “The company has vanished with huge amount of investors,” he rued.