New Delhi, Dec. 13: The government intends to tighten its regulatory regime and enhance the levels of penalties to deter violators of corporate law.
“We have noticed some weaknesses in the corporate world and in our own regulatory system. We are thinking of taking some steps in this direction,” Vinod Dhall, secretary in the department of company affairs, said at a session organised by the Federation of Indian Chambers of Commerce and Industry (Ficci). The session provided big business houses an interface with a panel of secretaries to the government.
Dhall said the corporate world needs a dose of liberalisation but needs to have a proper regulatory regime to oversee matters.
He said the level of penalties for corporate law violations was inadequate to deter wilful violators of law. “We will shortly set up a group to examine this aspect,” he said.
Dhall said: “We intend to set up a serious frauds office concentrating on select episodes of fraud only. About 8-10 cases will be dealt with every year but these will be very exemplary cases.”
He said: “There will always be people who will try and earn profit by violating rules, but regulators will keep punishing such people. Self-regulation always has to be tempered with outside prudent regulation.”
The DCA secretary said the initial consultation paper of the Naresh Chandra Committee, which is examining the entire gamut of issues pertaining to company-auditor relationship, will be made public next week and be put on the web for wider feedback.
Dhall said, “We have requested the members to look into areas concerning auditor setup, independence of auditor, role of independent directors, examine the relationship between the auditor and management and other related issues.”
The department of company affairs intends to set up a group to examine the regulatory framework for limited companies and private companies. “We want to see to what extent we can offload the rigour of a compliance regime. We will come up with the recommendations later on,” Dhall said.
Disinvestment secretary Pradip Baijal said the selloff might see the loss of some jobs but that should not be seen as a deterrent to the long-term reform process. He said 50 million jobs were lost in China during its restructuring programme, but it helped the country climb the global competitiveness ladder. “The rate of compensation in India for a job loss is three to five times more than China,” Baijal added.
Vinay Kohli, secretary, chemicals and petrochemicals, argued the government at best can play the role of a facilitator in order to create a business environment which attracts better investment.
He added, “We have successfully convinced the Planning Commission to take into account the need to kickstart the government initiative in building mega industrial chemical estates.”