The government has constituted a nine-member committee under the chairmanship of Naresh Chandra, former Indian ambassador to the US, to look into the liberalisation of regulatory norms and procedures governing private limited companies and partnership firms.

The committee will look at all the clauses governing private limited companies in the Companies Act, 1956, and the Indian Partnership Act, 1932. The department of company affairs has identified around 40 issues that need immediate attention.

Among other things, the committee will look at whether these companies require the department of company affairs' clearance for setting managerial remuneration, comply with norms related to holding statutory meetings and preparing statutory reports like the annual report in the prescribed format, fresh issue of shares, and restrictions on giving loans for the purchase of own or holding company's shares.

The committee has been given 45 days, from the date it holds its first meeting, to submit its report.

For Naresh Chandra this would be the second high-level committee, constituted by DCA in recent months, that he would head.

Only last month a committee under his chairmanship had submitted a report on auditor-company relationship.

The other members of the committee include Rajiv Mehrishi, joint secretary in DCA, corporate lawyer Shardull Shroff, ICICI Bank executive director Kalpana Morparia, ICAI secretary Ashok Haldea, company secretary SD Israni, chartered accountants Ashok Kapur, CR Dua and NV Iyer.

The constitution of the committee follows a query from finance and company affairs minister Jaswant Singh on whether DCA should be out of the business of regulating private limited companies and partnership firms altogether.

A member of the committee told Business Standard that the list of areas that the committee has to look into have been identified but other aspects would also be looked into.

Official sources said that the committee has been set up at a time when the business environment was changing and companies, particularly the smaller ones, need flexibility in running business.

"Smaller entities with fewer stakeholders should not be bogged down with unnecessary paperwork and there is also a need to simplify the procedures governing their entry and exit procedures," said a member of the committee.