Listing out various issues that need to be addressed on an urgent basis to aid the growth of business, the DCA note has proposed the constitution of a Competition Law Authority under the chairmanship of a retired Supreme Court judge. The department has also called for the early notification of the Investor Education and Protection Fund.

The need to set up a separate authority to deal with mergers, demergers, acquisitions and liquidation has assumed urgency in recent years following increased globalisation and restructuring of businesses, entry of multinationals and the inability of the high courts toprovide quick clearance on corporate matters. Several instances of MNCs pushing out their junior Indian partners in joint ventures have also alarmed the department enough to strengthen the administration of mergers and acquisitions and provide safeguards to protect the interests of local shareholders.

The high courts take as long as 9-12 months to clear such proposals after it is approved by shareholders as they are occupied with criminal and civil matters.

DCA secretary TS Krishnamurthy had proposed the setting up of a separate authority with powers equivalent to that of a high court to deal with these matters in early May, thus seeking to shift the administration of mergers, demergers, acquisitions and liquidation from the ambit of the high courts.

He had stated that a concrete proposal would be firmed up in consultation with the ministries of law and finance before a new government takes charge at the centre.

Legal sources felt that the Government would bring a second short amendment bill toempower the CLB to deal with these matters. The Companies Amendment Bill 1997, moved by the then finance minister P Chidambaram, sought to vest the Company Law Tribunal with powers to administer liquidation of companies (The Bill had proposed to convert the Company Law Board into a tribunal to make it more powerful).

The proposal for setting up the Investor Education and Protection Fund was cleared through the short amendment to the Companies Act by the Vajpayee Government earlier this year. However, a proposed notification for establishing the Fund with 8-10 members was shot down by the Election Commission on the grounds that it violated the moral code of conduct.

Similarly, a proposal for setting up the Competition Authority too was stalled by the Election Commission, sources in the department said.The Competition Authority was proposed to be set up as a statutory regulatory body on a par with the Telecommunication Regulatory Authority of India and the Insurance Regulatory Authority.

Departmentsources added that Competition Authority will devise mechanisms for ensuring healthy competition and quality of products and service.Current laws in place are seen as anti-competition by local and global companies. The Monopolies and Restrictive Trade Practices Commission does not have the powers to look into mergers and acquisitions in the corporate sector.