Bit by bit, through individual telephone calls, petitions, letters, ballots and multifarious ways citizens have pressurised the government to follow correct democratic procedures. However, this is not the time to rest, feels the former Central Information Commissioner
Right to Information (RTI) users have been allergic to any amendment in the Act because they know they have an Act, which is one of the best transparency acts in the World. Despite poor respect for laws and uneven implementation, citizens have found it acting as a great instrument for change. Most users have begun to feel empowered in negotiating with those in power using this instrument. Hence, they have been resisting any change in the Act. They rightly realize that those in power are uncomfortable with the Act and will weaken it if they have an opportunity. The Cabinet first decided to amend the RTI Act in 2006 and nationwide opposition to this move forced them to stall the move. In 2009, another move was made to get the Information Commissioners to support amendments to the Act, which was skilfully deflected. In 2012, ultimately the Cabinet decided not to pursue the agenda of amending the RTI Act and buried its decision of 2006 by giving a public assurance and burial to amendments.
The Central Information Commission’s decision on 3 June 2013, holding six major political parties as public authorities subject to the RTI Act, upset them. This meant being accountable to citizens at not only the time of elections, but all the time in terms of providing information. This irritated them and was a challenge to their arrogance. The government used this to get collusive agreement to issue an ordinance to amend the RTI Act. Public outrage at the thought of misusing a Constitutional provision brazenly managed to stall this. The government then decided to bring an amendment bill in the Parliament, realizing the unconstitutionality of its earlier move. Across the country, there were demonstrations and petitions opposing this. Over one lakh signatures were collected by a petition of National Campaign for People's Right to Information (NCPRI). In Gujarat, ballots were collected against the amendments and Mumbai held demonstrations outside railway stations. From many places there were reports of protests in a variety of ways.
Suresh Ediga staying in the US decided to call up members of Parliament (MPs) over telephone to persuade them to oppose the amendments. Many others took to this method and either met MPs or telephoned them. The grotesqueness of the political system ganging up to hurriedly pass an amendment to constrict the citizen’s fundamental right has now begun to dawn on our politicians. Citizens pointed out to the MPs that they did not appreciate their idea of changing the law without consultations with them. They pointed out that transparency in the political parties would improve faith and trust in them and lead to a better India. The Government appears to have realized the self-goal it was scoring and hence has decided to refer the bill to the Standing Committee. Citizens have cause to celebrate and congratulate themselves.
As individual citizens without any central organizing body, they are exercising their sovereignty. They did not get together in a mass, which would threaten authority. But bit by bit, through individual telephone calls, petitions, letters, ballots and multifarious ways they put pressure on those in power to adopt the correct constitutional device first and then to adopt a proper consultative and deliberative process. Citizens have done this exercise in a very mature fashion, demonstrating how to make democracy function and have held a candle to their MPs. This is how democracy must work through peaceful, persuasive engagement; not using whips and unruly methods.
They will continue this process of engagement with the political class and the Parliament, until it is accepted that no RTI amendments will be made until 2025. That will be a solution, which will allow them to focus on spreading the law to all and making transparency and accountability non-negotiable in our governance. This is not the time to rest. Yes, we, the people, will make it happen.
(Shailesh Gandhi served as Central Information Commissioner under the RTI Act, 2005, during 18 September 2008 to 6 July 2012. He is a graduate in Civil Engineering from IIT-Bombay. Before becoming a full time RTI activist in 2003, he sold his packaging business. In 2008, he was conferred the Nani Palkhivala Memorial Award for civil liberties.)
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With every new legislative act one would hope that the law will be simpler, more transparent and will be for the larger good of the citizens. Will these changes lead to better governance and more investment opportunities?
The new Companies Act has made many sweeping changes regarding governance, transparency, disclosures, responsibilities of directors, class action suits and a more powerful Serious Fraud Office. On the face of it, the new company law has fewer provisions—with only 470 sections compared to the present Companies Act, 1956 which has nearly 700 sections. However, the new law has many more provisions by way of rules. Separately, amendments to the SEBI Act have made it one of the most powerful market regulators in the world, given it the power to search, seize and freeze accounts and assets, with very little oversight on its actions. Will these changes lead to better governance and more investment opportunities? At an exclusive Moneylife Foundation event, two very knowledgeable and independent-minded people in the business— Savithri Parekh, Head of Legal & Secretarial, Pidilite Industries and Jayant Thakur, Chartered Accountant, shared their views on these two momentous legal changes
Ms Parekh discussed the highlights of the Companies Bill 2012. Given the recent corporate scandals there has been a greater focus on corporate governance and transparency. There have been substantial changes in the restructuring provisions with greater focus on disclosure and compliances. The Director’s Report will contain enhanced disclosures such as number of meetings of the board, policy on Directors’ appointment, remuneration including qualification, positive attributes, independence and other matters, particulars of loans guarantee and investments and details about CSR policy and initiatives.
While the earlier Act had no provisions on insider trading, under the new Act insider trading is prohibited and penal provisions under the corporate laws will also be applicable. This would mean the guilty would be subject to imprisonment up to 5 years or fine of minimum Rs. 5 lakhs and maximum Rs. 25 crores or three times amount of profits or both. It is not uncommon to find companies taking their minority shareholders for granted; some even go to the extent of virtually short-changing investors who put their faith in the company. Knowing the limitation of individual investors to fight against a company’s might, many a company has taken them for granted. To overcome this weakness in the law, the Companies Bill has now proposed a new Clause 37 that provides for action by a group of shareholders
Mr Thakur, who has advised listed and non listed companies and intermediaries on SEBI laws, other corporate laws, etc, spoke on the new provision for independent directors. The new provision states that a listed company should have at least one-third independent directors and no stock options can be given to independent directors. This move ensures that rotation of independent directors is envisaged. It ensured improved transparency in the conduct of business.
Speaking on related party transactions, Mr Thakur said, there was limited scope for transactions and persons covered under the earlier Companies’ Act. The new provisions have an enhanced scope of reporting transactions. ‘Related parties’ would include relative, directors with certain shareholding, persons in advisory capacity to the board. This ensures greater transparency in operations with key persons.
While the existing law has no provision for the tenure of auditors, the maximum tenure of auditors under the new provision individual auditors to be rotated every five years and audit firms every 10 years. The auditors would need to comply with the auditing standards. There are also restrictions on the auditors which is inline with global audit norms. The provisions also introduce an increased liability of auditors if found involved in fraud or has abetted or colluded in any fraud. Auditors can also act as whistleblowers.
For the first time, a provision has been made for class action suits. It is provided that specified number of members, depositors or any class of them, may, if they are of the opinion that the management or control of the affairs of the company are being conducted in a manner prejudicial to the interests of the company or its members or depositors, file an application before the Tribunal on behalf of the members or depositors. Knowing the limitation of individual investors to fight against a company’s might, many a company has taken them for granted. To overcome this weakness in the law, the Companies Bill has now proposed a new Clause 37 that provides for action by a group of shareholders.