Prioritising investor protection in the backdrop of corporate frauds and failures worldwide, the newly formed Company Affairs Ministry on Wednesday said it will expedite the process of putting in place Competition Commission, National Company Law Tribunal and a comprehensive Companies Act.
Minister of State for Company Affairs Prem Chand Gupta said his ministry would work closely with the Securities and Exchange Board of India to safeguard the interests of investors.
"There is no clash (between the Department of Company Affairs and Sebi). There is perfect harmony...the main purpose must be achieved and that is to protect the investors," Gupta told reporters after assuming office.
He said the ministry will not hesitate to review the existing guidelines to ensure that companies raising money from the market do not dupe investors.
Citing an example, he said: "Cyberspace was initially a construction company but later changed its name to claim itself as an IT company. It went on to dupe investors over Rs
800 crore (Rs 8 billion)."
Changes in the provisions for change of name and registration may be reviewed, he added.
Spelling out his agenda, he said the ministry is in the process of drawing up a comprehensive Companies Bill which would be updated according to the latest developments and obsolete provisions removed.
He said the government will put in place the Competition Commission and NCLT by July after sorting out the legal hurdles.
Gupta said some measures might be taken to strengthen the Serious Fraud Investigation Office to ensure erring companies did not escape unpunished.
"I don't want any undue harassment to companies but want to ensure the investors interest are taken care of," he said.
Computerisation of the entire department is also on the cards to streamline the procedures.
The department has already invited bids and the process will start from January 2005 and will be completed by the next year, Company Affairs Secretary M M K Sardana said.
"There are over 800 provisions which one has to meet to set up a company. This has to be streamlined," Gupta said, stressing on a comprehensive law and simpler procedures.
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