F. No.1/1/2004-CL-V

No: 1/3/2003-RC

Government of India

Ministry of Company Affairs

___________

 

Shastri Bhavan, New Delhi.

Dated the     4 August, 2004

 

PRESS NOTE No: 1/2004

 

 

Subject:           Concept Paper on Company Law.

 

            The need for streamlining the existing Companies Act had been continuously felt in the past with as many as 24 amendments having taken place since its enactment.  Exercises were also taken up for development of a new Companies Bill from time to time.   A need has been felt for simplifying the Law and making it compact and amenable to clear interpretation.  It is also increasingly being recognized that a new framework had to be placed in position in tune with the emerging scenario, encouraging good corporate governance and essentially including protection of the interests of the investors and other stakeholders.  In the competitive and technology driven business environment, while corporates require greater autonomy of operation and opportunity for self-regulation with optimum compliance costs, this must be reciprocated by way of transparency through better disclosure and greater responsibility for improved compliance and enforcement norms.

 

Meanwhile Government have received valuable inputs from various committees and expert bodies suggesting legislative measures for strengthening the above stated objectives. Some legislative amendments have been at an advanced stage of consideration for some time.  Keeping all aspects in view, it was felt that the existing Companies Act needed to be revamped comprehensively with the following features:

a.                   Bringing about compactness by reducing the size of the Act;

b.                   Removing redundant provisions ;

c.                   Reordering of existing provisions under interrelated categories;

d.                   Rewriting of various provisions to enable easy and unambiguous interpretation;

e.                   Providing greater flexibility in rule making to enable timely response to ever evolving business models.

Over the years, the intensity of the interests of the stakeholders and general public, including media in corporate related matters has been rapidly increasing.  This has been perceived as a healthy development towards building a proper legislative/enforcement mechanism.  Keeping this trend in view and the need for  comprehensive development of Company Law in tune with the above stated  objectives, it is felt necessary to have a wide based consultative process that will allow ideas, comments and suggestions to flow in from all quarters.  This exercise would enable the Ministry to work out an appropriate legislative proposals that will meet the requirements of India's growing economy in the years to come.

As a first step in such consultative process, the Ministry is placing a Concept Paper on Company Law in the legislative model, along with explanatory notes on chapters, for viewing on the electronic media so that all interested may not only express their opinions on the concepts involved but may also suggest formulations for the consideration of the Ministry on various aspects of Company Law.

The Minister for Company Affairs, Shri Prem Chand Gupta was pleased to initiate the consultative process with placement of the Concept Paper on Company Law on the website of the Ministry of Company Affairs at http://www.dca..nic.in on August 4, 2004.