NEW DELHI, May 7: The industry has hailed the recommendations of the Companies Bill. It welcomed the provisions relating to the buy-back of shares, hybrid options like differential voting rights, restrictions on inter-corporate investments and loans, rationalisation in the classification of companies, compressing the number of sections from 658 to 457 and schedules from 15 to three.

The Confederation of Indian Industry (CII) said the new law would provide for greater flexibility and self-regulation among companies, besides ensuring transparency. These measures would lead to rigorous enforcement of the law, which now contemplates strict penalties.

CII has, however, questioned the logic of the statutory provision pertaining to the appointment of the chief financial officer. A greater degree of flexibility should have been provided to corporates in the changed milieu. There was no need for the provision, CII added.

The Federation of Indian Chambers of Commerce and Industry (FICCI) said the purpose and intent of the bill is to ingrain flexibility, transparency and accountability in corporate laws.

Corporates should keep in mind the interest of investors to usher in a new ethos corporate governance by way of proper disclosures, FICCI added. The chamber said there was a scope for pruning the number of sections further.

For instance, the chamber argued, winding up more than 100 sections, could have been taken out from the Companies Act, and a new Insolvency Act enacted, as was the case in the UK.

The Associated Chambers of Commerce and Industry (ASSOCHAM) said certain additional disclosures relating to accounts, audit and financial disclosure in multi-divisional companies, was not necessary.

The Securities and Exchange Board of India (SEBI) should exclusively deal with matters on raising of capital, securities with differential rights, buy-back of shares and employees' stock option scheme for listed companies, the chamber added.

It said the present position regarding proxy has worked well. But, the suggestion that proxy be allowed to speak or allow to vote on show of hands, was not desirable. This, because it will lead to a new class of professionals, who would have their say, without holding a stake in the company.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.