New Delhi, Aug. 1: A day after the Naresh Chandra Committee presented its second report on corporate governance to the finance minister, the Confederation of Indian Industry (CII) has lambasted the Companies (Amendment) Bill, 2003, which is now before Parliament.
In a note sent to the office of the Prime Minister, the finance minister, the minister of law and justice and the commerce and industry minister, CII president Anand Mahindra has criticised some of the provisions of the Companies (Amendment) Bill, 2003.
The chamber has reacted strongly against the new definition of a subsidiary in the companies bill, and that a subsidiary cannot have another subsidiary.
The chamber is peeved with the provision in the bill that requires every company to make investments through one investment company only. Neither are the members happy with the idea that the maximum age for retirement of directors is 75, when the Prime Minister of the country is 78 years old.
CII has taken exception to the provision that nine years is the maximum tenure for an independent director. The chamber has also argued that the provision that a majority of the board of directors be independent, should not be applicable to un-listed companies.
Mahindra said sections of the bill create roadblocks to corporate growth and the need for increasing competitiveness.
“Provisions that stunt growth, place needless speed breakers in the path of corporate performance or hinder competitiveness cannot be justified as good corporate governance measures,” Mahindra said.
The second Naresh Chandra committee report on corporate governance has mooted changes in several provisions of the Companies Act.
The committee, headed by retired bureaucrat Naresh Chandra, has suggested the creation of a new category of companies called small private companies (SPC). SPC is a new category of company to be registered as an SSI unit with sales not exceeding Rs 5 crore and a paid-up capital and free reserves up to Rs 50 lakh.
The report also proposes simplified exit norms for private companies. It also provides norms for limited liability partnerships (LLP). Initially meant for professionals, LLPs may later be extended to other businesses.