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LAW MINISTER INAUGURATES SEMINAR ON CONTEMPORARY ISSUES IN CORPORATE SECTOR
New Delhi - December 5, 2001

The Union Minister of Law Justice and Company Affairs Shri Arun Jaitley has said that India needed a new Corporate Insolvency Law in a broadly free market economy to convert non-performing national assets into productive use or turn them to alternative uses. Inaugurating a day-long Shri Ram College of Commerce National Colloquium on Corporate Sector in India: Contemporary Issues here today the Law Minister said that under the existing Insolvency Law investors and shareholders have been losers. The existing BIFR created under the Sick Industrial Companies (Special Provisions) Act has not helped. The experience of insolvency settlement and compromises worked out by BIFR have not worked well. The system therefore required a complete overhauling.

The Minister talked at length of the proposed new Insolvency Law in the form of the Companies (Amendment) Bill 2001 now before Standing Committee of Parliament and said that the alternative new Insolvency Law would ensure a time bound framework for revival or winding up of company in a free market economy under the aegis of single authority called National Company Law Tribunal. The other issues that the corporate sector faced today related to a new Competition Law as against the existing Monopolies and Restrictive Trade Practices Act to give effect to competition, faster, mergers, amalgamations and demergers and to prevent abuse of dominance by companies. Yet another important issue related to conversion of cooperative businesses of manufacturing cooperatives into companies under the Companies Act. He said that a Bill to this effect was now before Standing Committee of Parliament.

The Minister called for the Constitutional mechanism to respect the regimen of regulators so that free market economy worked efficiently and hassle-free. In this connection the Minister said times were changing fast. So were the attitudes. The Government now acted more as a facilitator. It was for the corporate sector to deliver the good. He called upon all concerned to evolve consensus in the matters of power reforms and labour reforms so that industry functioned in an environment with growing competition and waning protection. The Minister lamented that the concept of corporate governance was not functioning hassle-free as fifty per cent of companies did not take trouble of filing returns on time. He said that amongst the profit making companies 80 per cent such companies did not declare dividends. This was a matter of serious concern and called for restructuring the corporate environment the Minster added.

The industrialist Shri Kumar Manglam Birla who delivered the key note address said that challenges facing the corporate sector in India were enormous and today the businesses would have to live with the realisation that its future was not assured. He said that the corporate sector should live with changes and growing deregulation to face globalisation competition and improving customer friendly services. Infrastructural bottleneck had to be addressed amidst strong partnership between the Government and the businesses.

The Secretary Department of Company Affairs Shri V.K. Dhall in his key note address on Corporate Governance: Problems and Perspectives during the first business session of the seminar spoke at length about the concept of corporate governance and said that accountability of the corporate sector transparency compliance of laws by timely filing of returns social responsibility and corporate ethics were important ingredients of corporate governance that the companies must comply with in order to face the challenges of globalisation.

Press Release by: PIB - MYS : NC: 5-12-2001
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