New company law will promote transparency, says PM

IN GOOD COMPANY: Prime Minister Manmohan Singh with S. Ramadorai (right), Chief Executive Officer of Tata Consultancy Services, at the launch of `MCA21' e-Governance project in New Delhi on Saturday.   | Photo Credit: PHOTO: KAMAL NARANG

Special Correspondent

Bill to be introduced in the next few weeks

NEW DELHI: The Prime Minister, Manmohan Singh, on Saturday announced that the Centre would soon put in place a comprehensive new company law to replace the 50-year-old archaic legislation to usher in greater transparency and efficient governance.

In his address after launching the e-Governance project of the Ministry of Company Affairs, `MCA-21' aimed at freeing seven lakh Indian companies from statutory paper-filing and "inspector-raj", Dr. Singh said: "Our Government is committed to formulating [a] comprehensive new company law and work on the report of [the] Irani Committee has been completed. We will be bringing a new Bill to Parliament in the next few weeks."

The focus of the new company law, he said, would be on promoting greater transparency and good governance in firms while extending to them greater independence in operations. "Such a law will be [a] comprehensive revision of the 50-year-old company law and bring us in alignment with current needs," Dr. Singh said.

Alongside, Dr. Singh asked the Ministry of Company Affairs (MCA) to examine issues such as `limited liability partnerships' which "are essential business structures" in the emerging knowledge economy.

"We will also expedite the adoption of accounting standards in alignment with the international accounting standards so that we have better disclosure norms on a par with global best practices," he said.

The `MCA-21' programme, the Prime Minister noted, provided for cross-referencing of financial statements of companies filed with the Registrar of Companies and other regulatory institutions like tax authorities, the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).

"This will be a one-stop filing window... [and] make business easier for business, and governance easier for [the] Government," he said.

Banks and financial institutions too could use such data for improving their credit evaluation norms as also the overall quality of credit.

"The financial sector should explore the possibility of standardising formats to enable secure interaction between banks and the Government," he said, and asked the Ministry to create appropriate institutional mechanisms and knowledge resources for utilising the data archive and generating reliable statistics pertaining to the corporate sector.

Envisioning a major role for public-private partnerships, Dr. Singh asked Indian software companies to help usher e-governance into the country.

"The new technologies that we have mastered can make Government more transparent and simple and less intimidating to the common man and to our firms. They can also make Indian business more globally competitive," he said.

Earlier, the Minister for Company Affairs, Prem Chand Gupta, said his Ministry was planning to bring the liquidation process of companies under e-governance.