National Conference on "Emerging Trends in Corporate Laws"
November 10, 2006 New Delhi

Welcome Address by Shri Saroj K Poddar, President, FICCI

Shri Prem Chand Gupta, Hon'ble Minister, Ministry of Company Affairs
Shri Anurag Goel, Secretary, Ministry of Company Affairs
Shri Lalit Bhasin, Managing Partner, Bhasin and Company Advocates

Ladies and Gentlemen,

I take great pleasure in extending a very warm welcome to Shri Prem Chand Gupta, Hon'ble Minister for Company Affairs, who has very graciously responded to our invitation to be the Chief Guest at today's Conference. I also welcome Shri Anurag Goel, Secretary, Company Affairs for agreeing to deliver the Special Address. I must complement the Hon'ble Minister and his team of senior officials for their several initiatives towards transforming and modernizing the regulatory framework that governs the corporate sector.

Sir, I take this opportunity to complement you and your team for the massive computerization programme undertaken to improve the functioning of the Registrar of Company and Ministry of Company Affairs. The introduction of MCA-21 is indeed a bold, forward looking and pragmatic step. As in most advanced countries of the world, in India too, we can now move seamlessly into a new transparent "e-governance environment".

Sir, with your permission, before taking up the agenda of today's conference, let me raise a few broad issues concerning corporate laws.

The consultation on the new company law has been fairly open and extensive. The private sector has been involved closely in this process and I thank you for giving us a patient hearing. We do hope that the issues raised during the process have been taken care of in the draft legislation. Perhaps, we can once again be brought in at the draft stage for another round of consultation. We do hope that the legislation is simple, as excessive regulations would only prove to be counter productive.

Sir, we also complement you for your initiative on revising our Accounting Standards. We hope that the new Accounting Standards while incorporating global best practices to inform the investor, will keep the standards simple and easy to implement. It is vital that cost verses benefits, as well as confidentiality needs and competitive value of information is kept in mind while drafting disclosure requirements. What is also required is that adequate time is given to the companies to implement the new standards.

Sir, another issue, which is vital and which I have raised in the last conference on Corporate Laws as well as in the conference on legal and judicial reforms is with regard to Section 138 of the Negotiable Instruments Act. Though the law is very clear that Section 138 would not be applicable in case of non-executive directors, it is not being implemented inspirit. Non-executive directors are unnecessarily facing problems due to non-implementation of the amended provision. May I request you to ensure that the amended section 138 should be implemented.

Sir, it is gratifying that the Naresh Chandra Committee on Regulation of Private Companies and Partnership and Expert Committee on Company Law under the Chairmanship of Dr J J Irani in their Reports appreciated the need for a new form of organization and recommended the introduction of an LLP, to fill up the much needed gap and to be compatible with international practices. Sir, I would like to compliment you and senior officials for pro-actively working on this. We, in FICCI, are of the view that in a growing economy like ours, this Bill will help in creating more business partnerships by taking away the risk element.

Sir, I take this opportunity to draw your kind attention to some aspects of this LLP Bill:

One: Provisions on compulsory insurance should be incorporated in the LLP legislation in India as well in the lines of similar provision in the UK Laws. This is critical for satisfaction of judgement and decrees against the LLP to a reasonable extent. This is quite vital for the professional firms, wherein the services provided by them expose them to disproportionately high liabilities for negligence etc.

Two: A stamp duty relaxation should be made available on conversion of existing partnerships / private and unlisted public companies to LLP in India. In UK also, an LLP must be established and then the business and the assets of the existing partnership or company transferred. There is stamp duty relief on any property transferred within the first year of conversion. We are aware that the stamp duty is a State subject. FICCI time and again has urged the Government that stamp duty should be lowered and made uniform across States.

Three: On taxation issues, we would strongly urge that Ministry of Company Affairs should work in tandem with Ministry of Finance and other administrative Ministries to avoid litigations and for harmonizing all tax provisions.

Four: It needs to be clarified whether LLPs would be "eligible entities" for receiving foreign investment under the automatic route so as to avoid uncertainties, litigations and to give right signals to the investing community.

The issue of opening of professional services has been debated for quite some time. We hope that any such initiative is a part and parcel of multilateral negotiations.

In this increasingly complex environment, new skills and professionals are required in line with global practices. We therefore welcome ministry's initiative in creating new professional services.

Sir, these are some of the issues that I want to place before you for your kind consideration. We have amongst us experts from different disciplines in various technical sessions. I am sure we will have a fruitful deliberation over the rest of the day.

Thank you