New Delhi, December 19, 2017

Chidambaram calls for separate law for SMEs

With the Rajya Sabha also passing the Companies Bill on Tuesday, the enactment of crucial amendments, which are more than 40, to the 2013 law will be a reality as soon as President Ramnath Kovind signs on it.

The Lok Sabha had cleared the amendments in the Monsoon Session of Parliament.

Replying to the two-hour debate on the amendments, Minister of State for Corporate Affairs PP Chaudhary said the amendments will strike a balance of competing interests of various stakeholders. He said stringent actions have been provided in the Bill for fraudulent conduct of business and default of public deposits.

He said greater transparency has also been provided to prevent money laundering. The Bill, according to him, will also help to improve ease of doing business in the country.

“The latest legislation would help in simplifying procedures, make compliance easy and take stringent action against defaulting companies,” Chaudhary said.

Initiating the debate, former finance minister P Chidambaram welcomed the legislation. He said the Centre’s objective seems to be noble to help small and medium companies and save those companies from the rigours of Companies law.

“But the way you have gone about it will have perverse consequences. You have only one Act. That Act applies to large companies, to medium companies and small companies. If you make provisions in that Act, keeping in mind what you want to do only for small and medium companies, the consequence will be inevitably the relaxation that you will apply to large companies also.

“The only way out of that dilemma is to make a separate law for what you define as small and medium companies,” he said and added that eventually there needs to be a separate law for small and medium companies and a very comprehensive Companies Act only for large companies.

Chidambaram opposed the amendment to delete Section 195 and 196 which provide for prohibition of insider and forward trading.

He said the provision should be part of the Act as SEBI does not have jurisdiction over unlisted companies and there could associate or subsidiary companies of listed companies, which can indulge in insider or forward trading.

Tapan Sen of the CPI(M) said the Bill will help big multinational companies to maximise their profits using public money. He said the legislation will hold the country to ransom.

[The Hindu Business Line]