Companies Bill: Panel asks Govt. to reduce provisions for delegated legislation

The Standing Committee of Parliament which examined The Companies Bill, 2009 has advised the Ministry of Corporate Affairs to reconsider the provisions made in it for excessive delegated legislation.

In its 21st report as the Standing Committee on Finance (SCF) presented to Parliament recently, it pointed out that several matters requiring substantive provisions were left for rule-making.

It observed that the words "As may be prescribed" had been used in the Bill approximately 235 times, thereby suggesting excessive role and scope for delegated legislation.

An official press release said that the Ministry had, accordingly, agreed to shift some of the rule making provisions for inclusion in The Companies Bill, 2009 itself in respect of 25 clauses.

These include definition of small companies [clause 2 (1) (zzzg)]; manner of subscribing names in the Memorandum of Association [clause 3 (1)]; prescription of time to refund share application money [clause 35 (3)]; provisions and time limit for further offers of shares, their acceptance and renunciation etc. [clause 56 (1)]; matters into which the auditors shall enquire while conducting audit [clause 126 (1)]; time limit for filing of consent by a person to act a director [clause 133 (5)]; maximum number of persons for formation of association or partnership [clause 422 (1)].

The SCF has recommended that these provisions for delegated legislation or rule making, as agreed to by the Ministry, may be appropriately incorporated in the Bill.

But, at the same time the SCF has emphasized that simple procedural aspects which may require flexibility and periodic revision depending on time-period or economic circumstances should continue to remain in the domain of delegated legislation, the release added.

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