The Companies Bill 2012 is likely to be passed in the coming monsoon session of Parliament, says Corporate Affairs Minister Sachin Pilot, as there is a broad political consensus on the legislation that aims at plugging loopholes in the system for a better corporate governance and business environment.
"This bill has been well thought out by all the stakeholders on board. There is no question of negotiating the terms of the bill. There is broad consensus of all political parties that it is a positive bill," Pilot told reporter in an interview.
India's first Companies Act was made way back in 1919 in colonial times. After independence, a new Companies Act came into force in 1956. Since then the act has been amended 25 times. The new Companies Bill 2012 was passed by the Lok Sabha after 11 years of deliberations and two rounds of approval of the standing committee were taken.
The minister also said the Companies Bill has defined the word 'fraud' categorically, which had so far not been defined in the Companies Act.
"There are around 1.2 million companies registered in India. We are looking at lesser regulations, more compliance, strict enforcement and action and freedom of the entrepreneurs."
Regarding setting up of the much-awaited National Company Law Tribunal (NCLT), he said the NCLT will be set up and it will help shorten the time required to wind up a company. "In the new structure the NCLT will be able to take many decisions regarding the companies, arbitration and winding up."
Pilot said the new bill even mandated that for certain class of companies there should be one woman director on the board.
"I am hopeful when the monsoon session starts it will see the light of the day."
Pilot also said his ministry is planning to unleash a mass education programme across the country in various regional languages through the mass media to enlighten the people on financial investment.
"Within four to six weeks we can see this campaign happening. Its job is to give right information; not cautionary information, but what is good, what is bad, what is legal or illegal through SMS, internet, radio, social media and local media," he said.
"There has to be a culture of good investment."
In the recent multi-crore Saradha Group Chit Fund scam in West Bengal hundreds of people have lost their jobs and thousands were duped of their savings.
Referring to the chit fund scandals in the country, the minister said these usually happens to people who have least information and least resources. "All these chit funds and similar businesses have to be registered with the Registrar of Chit Funds in the state governments. The Serious Fraud Investigation Office (SFIO) is investigating all the 54 companies against which complaints have been received by my ministry."
SFIO is a multi-disciplinary organisation that investigates serious financial frauds.
He said the SEBI, RBI and the finance ministry are also working on this. "The idea is not to act after the fraud has happened. I have been asking my ministry to detect frauds before it happens. These companies need to be registered, monitored and regulated by various agencies including state governments."
On his recent US visit, he said it was a visit to understand best corporate practices over there. "India is a USD 1.5 trillion economy. Now Indian companies are working in foreign countries, foreign companies are working in India; what impact it has in the home countries and what are the sorts of the experiences they have because people who do corporate frauds, find new ways of devising to circumvent the law; what are those technologies? It was to understand those."
Regarding the probe by the Justice Mudgal Committee that looked into WalMart's lobbying activities to enter the Indian market, Pilot said:
"We have received the report that Justice Mudgal has given us and we are now working on things we need to do, according to what the report has suggested. In the monsoon session, I will be presenting the report along with the actions which will be taken."
Pilot said there is a need to define the word lobbying legally.
"Today there is a lot of ambiguity and I think we must clear what is legal or not legal. Advocacy is happening today also; people are giving inputs for policy making, some people come and talk against a policy or for a policy; this advocacy should happen in full public view and in a transparent manner. So that there is no closed room. But asking for a policy or tweaking a policy, if any, if those actions are out of the ambit of Indian law, then we must say it is illegal. Today, there is no clarity on that."