MCA, finmin iron out differences over Cos Bill

Written by Ronojoy Banerjee | Ronojoy Banerjee | New Delhi | Updated: Nov 1 2011, 06:29am hrs
The Companies Bill, which seeks to replace the over 50-year-old Companies Act, is likely to get Cabinet approval when it comes up for discussion next week.

Top government sources said all differences between the corporate affairs and finance ministries had been addressed in the latest version of the Bill.

In the revised Bill, all powers delegated to the Securities and Exchange Board of India (Sebi) have been brought under a separate head as opposed to being scattered across several sections in the earlier version.

Last week, Mukherjee had raised objections to the Bill, citing lack of clarity on the clause in the Bill which seeks to delegate powers to Sebi. The objections were mainly on how Sebi would derive its powers under the Bill. It has now become a lot clearer and is set to get the Cabinet approval, a top source in the ministry of corporate affairs (MCA) told FE.

He added the finance ministry had also voiced its satisfaction with the changes and it would be on the top of Cabinets agenda at its meeting next week. In an interview to FE, corporate affairs minister Veerappa Moily had also hoped the Bill would get Cabinet clearance soon.

The issue of precise jurisdiction of Sebi and MCA has come up several times in the recent past. The line between unlisted and listed companies is very thin, especially since several issues overlap, the government sources explained. For instance, while listed companies come directly within the ambit of Sebi, unlisted arms of these listed firms are overseen by the registrar of companies under the MCA.

However, the division of responsibilities is still very complex and hazy. MCA has the power to tighten norms that would have a direct bearing on listed companies too.

Sebi is only responsible for listed companies. We have to take care of every firm in the country, the MCA source said. The issue had come to light last year when Lucknow-based Sahara Group had cited jurisdictional issues between MCA and Sebi. The matter had to be resolved in the Bombay High Court.