The introduction of the new Companies Act may take longer than expected because the ministry of company affairs wants to garner the support of all stakeholders rather than try to ram the amendments through Parliament.
The MCA is currently waiting for reactions from different ministries to the draft amendments that were circulated last month. The MCA was prepared to wait for a response from all the interested ministries, and was not in a hurry to send it the Cabinet for approval this month so as to table the Bill the moment Parliament resits in May, an official said.
The monsoon session of Parliament later in the year appeared to be a realistic deadline for any meaningful discussion on the draft Bill, he added.
At the moment, the draft Bill was unlikely to be sent to the Cabinet in April for its approval, the official added. Earlier, MCA was keen on getting the Cabinet's approval so as table the draft Bill in Parliament session in May.
The prudent stance being taken by the MCA was partly the result of the lessons learnt through the delay in the passage of the Competition Act, the official said. The new Companies Act attempts to change the underlying philosophy of the government's approach to companies. Given the magnitude of the change, the MCA prefers to take everyone along.
MCA officials have often said the Companies Bill was unlikely to have a smooth passage in Parliament. The ministry expects the Bill to placed before the standing committee on finance for fine-tuning.
The Bill broadly aims to remove superfluous restrictions that the government currently imposes on companies, but simultaneously empowers it to check abuse by managements or governing boards.
The amendments to the Companies Act are an important item on the MCA's agenda. The current effort to amend the Companies Act has been preceded by a number of such attempts in the past. There have been 24 amendments in the past, with major amendments being made in 1988 and 2002.
The current round of proposals to amend the Companies Act include the constitution of an expert committee under the chairmanship of JJ Irani, director of Tata Sons, to make recommendations.
The Irani committee included representatives from industry bodies and regulatory bodies such as the Securities and Exchange Board of India.Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group
