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Industry chambers welcome companies bill recall, want Clause 49 amended

PTI - New Delhi

Welcoming the government’s decision to withdraw Companies (amendment) Bill 2003, industry chambers has asked it to suitably amend clause 49 of the listing agreement, saying proposals contained in this were detrimental to the growth of Indian corporate sector.

Among clause 49 provisions, the industry is objecting to the one mandating that every subsidiary should have 50 per cent independent directors, same as its holding company. Also, others like maximum term of a non-executive director be nine years and the whistle blower clause are causing concern.

In many provisions of clause 49, joint venture partnerships may face problems while in the case of non-executive directors’ term expiring after nine years, promoter directors may have to resign from their own firms.

Federation of Indian Chambers of Commerce and Industry general secretary Mr Amit Mitra, speaking on behalf of president Mr A C Muthiah, gave several exmples where provisions of the clause 49 mooted by Sebi will hurt India Inc.

“Ficci is of the view that some of the sub-clauses of the revised clause 49 are extremely detrimental for the growth of the corporate sector as well as the functioning of board of directors.....We will write a detailed note to Sebi and the finance ministry on the matter,” Mr Mitra told reporters here.

Echoing Ficci’s sentiments, Confederation of Indian Industries said Indian corporates are still worried about the clause since it “contains a number of provisions taken from the Companies Bill and in some areas it is far more restrictive”.

“With the withdrawal of the Companies (amendment) Bill, 2003, CII is of the view that Sebi should also amend clause 49 suitably to make it useful for Indian companies and then introduce it in a phased manner,” CII said.

Welcoming the withdrawal of Companies (amendment) Bill 2003, Assocham said the bill was “contrary to the said objective of liberalisation, deregulation and simplification of the laws governing the corporate sector”.

“There were certain grey areas in the proposed bill and some of the proposed provisions might not have withstood judicial scrutiny even if the bill was passed,” the chamber said.