New Delhi, Dec. 31: The committee appointed by the department of company affairs (DCA) to examine the modalities for a proper valuation of shares during mergers and demergers is expected to submit its report by the end of January 2003.
The ambit of the committee has been widened. “Earlier it was concerned only with the valuation of shares. But now, it will also factor in the valuation of assets during mergers or demergers,” DCA secretary Vinod Kumar Dhall told The Telegraph on the sidelines of a corporate governance award function organised by the Institute of Company Secretaries of India.
The committee headed by Shardul Shroff wants an independent valuation process, Dhall said. “All parties involved should have confidence that the valuation is fair,” he added.
Another committee, also headed by Shardul Shroff, is finalising its report on the penalty provisions in the Companies Act. Dhall, who had earlier remarked that the penalty provisions in the Companies Act were too meagre, said deterrents would also be incorporated in the Act to make companies adhere to the rules. The report of this committee is also expected soon.
Dhall said the finance minister and the Cabinet would have to decide on the issue of setting up the Serious Frauds Office (SFO), adding it would probably be in place next fiscal. Although there are no plans to grant powers of prosecution to the SFO, it is expected to deal with serious multi-dimensional cases in the corporate sector that require the co-ordination of several departments or ministries, the secretary said. The implementation of the recommendations of the Naresh Chandra committee report on aspects of corporate governance and auditing practices will start in about a fortnight after the time for inviting public comment ends, Dhall said.
While the department is trying to tighten regulations, it also wants to minimise transaction processes for smaller companies in order to make it easier to comply with regulations.
Meanwhile, the Institute of Company Secretaries of India presented its second national award for excellence in corporate governance to Dr Reddy’s Laboratories and Tata Iron and Steel Company Ltd. In the public sector, the award was given to IBP.