Last October, the Companies Bill 2008 was introduced in Parliament with a view to simplify and modernize company law by replacing the Companies Act, 1956. However, the Companies Bill lapsed with the dissolution of the Lok Sabha earlier this year due to the general elections. In the meanwhile, corporate India witnessed the massive financial fraud at Satyam Computer, owing to which there was anticipation that the corporate governance provisions in the Companies Bill will be further strengthened in the light of that occurrence.
The Companies Bill, 2009 was introduced in the Lok Sabha yesterday, but what is the curious is that the Bill is in the same form in which it was presented last year and has undergone no changes in light of the intervening events. The Government’s press release carries a brief explanation:
Earlier last year Companies Bill, 2008 was introduced in the Lok Sabha on 23rd October, 2008. Due to dissolution of the Fourteenth Lok Sabha, the Companies Bill, 2008 lapsed. As the provisions of the Companies Bill, 2008, are broadly considered to be suitable for addressing various contemporary issues relating to corporate governance, including those which have been recently noticed during the investigation into the affairs of some of the companies.
In view of above, the Government decided to re-introduce the Companies Bill, 2008 as the Companies Bill, 2009, without any change except for the Bill year and the Republic year.
While it is debatable as to whether the Government has missed an opportunity to strengthen basic corporate governance norms under company law by taking note of the lessons learnt from the Satyam episode, it is at least clear that the Government has refrained from adopting a knee-jerk reaction based on a single episode alone.
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