New director likely for minority shareholders
Companies Bill still silent on how boards would follow transparency model. Mahua Venkatesh reports.business Updated: Jan 15, 2012 23:15 IST
The Standing Committee, which is once again looking into the new Companies Bill, could suggest nomination of a director on boards of companies representing minority shareholders. The new Bill introduced in Parliament in December 2011, however does not clearly specify how boards should follow a model of transparency and disclosure to their minority shareholders though it has provided for easy exit options to them and the right to dissent in case they wish to.
The government, which has sent the Companies Bill 2011 to the Standing Committee for its comments last week, has asked them to submit its report within six weeks. The bill had already been referred to the Standing Committee once, before being placed in Parliament last month. The government, which is battling charges of policy paralysis, is keen to get Parliament approval for the bill and pass it as an act in the forthcoming budget session.
“Though the new bill does take care of minority shareholders in a certain way, it is not what had been earlier envisaged and stakeholders indicated that there must be a board member representing minority shareholders,” a Standing Committee member who refused to be identified told Hindustan Times. “That has been given a miss and this issue could be looked into.”
“We want everybody to be happy with the bill,” M Veerappa Moily, corporate affairs minister had said earlier.
“There must be full transparency and information must flow to minority shareholders too so that they are well informed about their company,” Manoj Kumar, corporate law expert said, adding that new bill does seek to protect and empower the minority shareholders.
The government’s decision to refer the bill back to the Standing Committee had come as a surprise to many especially as the committee had already delved upon it in details. However, the BJP demanded that the Companies Bill 2011 should be re-sent to the Standing Committee for its comments as it contained several new proposals.