Corporate Affairs Minister M. Veerappa Moily said Thursday the government was keen on getting the new companies act passed in parliament to help curb unfair business practices in India. The minister said the new act will also lead to better corporate governance in the country.
The bill comes in the backdrop of the 2009 multi-crore rupee accounting fraud within Satyam Computers that exposed gaping holes in corporate governance norms in the country.
The new act will make it mandatory for all listed companies to have 33 percent independent directors. The bill was introduced in parliament in the last winter session but had to be sent to the Standing Committee for amendments following bitter opposition by the Trinamool Congress.
The bill, which the government hopes will be passed in the upcoming budget session, empowers shareholder and provides for stricter standards of approval by them over management decisions. It seeks to strengthen corporate governance by including new provisions related to independent directors and auditors, according to the analysis of the draft bill by PRS Legislative Research, an independent think tank.
"New companies act will revolutionize corporate business in India," Moily said. He was addressing a seminar "New Companies Act: Relevance for Good Corporate Governance" organized by IGNOU in collaboration with teh Indian Institute of Banking and Finance IIBF.
"I am looking ahead for a better corporate sector in India and I am trying my best to get the new companies act passed in parliament," he said in his talk at the India Habitat Center in New Delhi. The law will replace the existing companies act implemented some six decades ago.