It would be necessary to understand the normal procedure involved for de-registration of a company to appreciate the utility of this scheme.

The procedure for de-registration of companies is covered under section 560 of the Companies Act, 1956. Under this section the registrar is required to send inquiry letters to the company if he is of the opinion that the company is not carrying on any business or is not in operation. Alternatively, a defunct company can apply to the registrar for striking off its name from the register.

If the registrar does not get any reply for his enquiry from the company then he has to send another letter to it. However, if the company accepts that it is defunct then the registrar has to proceed to clear the next formality.

The registrar then has to publish in the official gazette a notice about the de-registration of the company stating that the name of the company would be struck off after three months from the date of notice.

This entire process of sending inquiry letters, getting responses from the company, publishing notice in the official gazette and finally getting the name of company struck off from the register is a long drawn process and normally should take around 6 months.

However, due to procedural delays it gets delayed for a very long time. This delay coupled with stringent legal requirements and lack of co-operation from the government employees, is enough to scare away defunct companies from getting their names removed from the register. A host of incentives have been made available to the companies going under this scheme. The entire process of striking off of a company's name will be done in 37 days which is far less than the normal time taken. Secondly, there would not be much procedural hassles which are otherwise an integral part of any work conducted by the government.

By introducing this scheme the government has tried to kill two birds with one stone. This scheme would not only encourage defunct companies to get their names struck off from the register but would also reduce the burden of the DCA, which was facing huge problems in managing the records of lakhs of companies. At the same time the government is also expected to realise a great amount of money through this scheme.

The phenomenal success of the CLSS scheme has proved that the citizen of India is law abiding and would like to contribute towards the nation's success.

What is required now, in this arena of cutthroat competition is a reduction in the regulatory framework, which has hampered the growth of business.

The process of cleaning the past records has already begun with the government coming out with a host of amnesty schemes like Voluntary Disclosure of Income Scheme, Kar Vivad Samadhan Scheme, CLSS 2000 and many others at the state level and one can expect fewer regulatory hassles in the future.

Volatility
Volatility in the markets world over has assumed alarming proportions and it is here to stay, much to the chagrin of the common investor. Back home, in the roller coaster ride in the markets, just yesterday, the Sensex gained 141 points in a turbulent trading day.

This was in tandem with the other markets. The Hang Seng gained a whopping 818 points, the Japanese Nikkei was up by 225 points, whereas the Dow Jones and the Nasdaq too witnessed positive gains. Well, it seems that the markets have taken to globalisation really well. A sneeze at Nasdaq ends up in a cold in all other markets that matter.

The 141 point gain by the Sensex followed a 224 point fall on the September 22. About 35,000 crore of shareholder wealth was eroded off within a single day from the BSE. Moreover, the Sensex had shed over 700 points in the last week. Admist such unprecedented market movements, the market seems to give jitters to the common investor. Volatility is a reflection of the minds of the investing community and the markets as a whole.

It would be interesting to ponder over the reasons of volatility in the markets. The most obvious refrain is that there are a large number of day traders or speculators in the markets.

But conversely, it could be argued that volatility arises because the risk appetite of the investing community is low. But, then why is that so many fools venture into the markets even if they are likely to burn their hands? Secondly, there is lot of contradictory information available on the stocks and the markets. This percolates down very fast and is visible in the form of the "herd mentality."

Lastly, it is argued that the true valuation is hard to arrive at, especially in the new economy stocks. That is why it is hard to find a contrarian in a melting or rising market scenario.

In the Indian markets, the traders and the speculators account for about 88 per cent of the total turnover at the bourses. However, the FIIs and the other institutional investors (including mutual funds) are in a position to influence the markets, because of the volumes. And although, it could be argued that these funds and institutional investors follow long term strategies, paying no heed to the intra-day happenings.

Invariably, the redemption pressures dictate the market operations of these investors. And it is anybody's guess what this does to the volatility in the markets.

Prashant Kothari and Sachchidanand Shukla