The committee, which presented its recommendations to the government on the concept paper for the new Companies Act, made a slew of suggestions aimed at simplifying the existing voluminous act and tune as well as prune it to present day realities.
However, one of its major recommendations on independent directors goes entirely in confrontation with SEBI, which insists on Clause 49 compliance that stipulates that at least a half of the members of the board of directors should be independent.
Speaking to reporters after presenting the report, Irani said that effort had been made to simplify the law and procedures governing companies. "We have tried to incorporate views from various quarters," he said.
Company Affairs Minister P C Gupta said the government would bring a bill on the new act by the winter session of Parliament.
Elaborating on the various provisions, Irani said violations would attract stringent penalties. "We have given full liberty to shareholders and promoters to run the companies. But in case of violations, penalties will be stringent," he said.
Irani, who was entrusted with the task in December last year, said that celebrities and other public personalities on a company's board would also be liable to punishments in case of default.
"We discussed this issue. Any director who sits on board at the time of investment/public issue will be held responsible /liable for that issue for at least two years," he said.
To check the menace of vanishing companies, the report said that preventive action in respect of such companies should begin with registration itself and be sustained through a regime that requires regular and mandatory filing of statutory documents.
"Non-filing of documents or incorrect disclosures should be dealt with seriously. Delays in filing should be penalised through non-discretionary late fee relatable to the period of default," the report said.
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