Companies amendment Bill introduced

Our Corporate Bureau

New Delhi, Aug 31: The minister for law, justice and company affairs, Mr Arun Jaitley has introduced the Companies (Second Amendment) Bill 2001 in the Lok Sabha on Friday. The bill seeks to facilitate formation of cooperative business as per the provisions of the Companies Act, 1956. According to an official release issued here on Friday, the bill would provide an opportunity to co-operative institutions to voluntarily transform themselves into new form of producer companies. This facility will be available to inter-state co-operatives whose objects extend to more than one state.

As per the provisions of the Bill, member equity may not be publicly traded but only may be transferred with the approval of the producer company’s board of directors. Producer companies would also not be vulnerable to the takeover by multinationals or other companies, the bill states. The conversion option by the inter-state co-operative society to producer company can be exercised only if two-thirds of the members of the concerned society vote in favour of that resolution.

The new form of the company would be designated as producer company to indicate that only certain categories of persons can participate in the ownership of such companies. However, the Bill specifies that the members of the producer company should be engaged in activity related to the primary produce. The objects of the bill have been defined to include production, processing, manufacture and sale of primary produces. The Bill closely follows the recommendations of the YK Alagh Committee which was set up to recommend formation of co-operative business as companies and to convert existing co-operative business under a regulatory framework.