Regulators should intervene only in case of grave violation says Chidambaram
Moneylife Digital Team 12 February 2014

Noting that compliance need to be enforced, the finance minister said in cases of deviations, faith must be put on the company's board of directors and shareholders to take action against those violating laws

 

Finance minister P Chidambaram on Wednesday said that regulators should intervene only in cases of gross violations by companies or when there are clear cases of criminality so that they do not get over burdened.

 

Speaking at the Golden Jubilee celebrations of the Central Vigilance Commission (CVC), the minister said the new companies’ law aims to ensure transparency, better disclosures and better accountability.

 

"Regulator or an armed regulator must intervene and I urge that they do so only on the basis of gross violation or gross excesses or if there is clear case of criminality, Chidambaram said, adding "We must keep faith in self-regulation".

 

He further said that if any non-criminal deviation shall be investigated or regulated by regulator, that way regulator will simply be over burdened by work and regulation will fail.

 

Noting that compliance need to be enforced, the finance minister said in cases of deviations, faith must be put on the company's board of directors and on shareholders to take action against those violating laws.

 

Referring to the new companies act, the minister stressed on caution while exercising the powers. "While I strongly support the structure of the new Companies Act, I would urge caution in the manner in which powers are exercised," he said.

 

"I reiterate, we must bring self-regulation, we must enforce compliance, need to heed to board of directors and shareholders and only in exceptional cases should regulator intervene to punish gross grave cases of proven criminality," Chidambaram added.

 

The new Companies Act, which was approved by Parliament last year, has various provisions to protect investor interests and to prevent corporate misdoings.

 

Later replying to questions, Chidambaram also said, "We have a problem of corruption and we have to deal with it. The belief that India is most corrupt nation is completely wrong.

Comments
MG Warrier
1 decade ago
The position taken by FM in his observation "I reiterate, we must bring self-regulation, we must enforce compliance, need to heed to board of directors and shareholders and only in exceptional cases should regulator intervene to punish gross grave cases of proven criminality," is quite intriguing. It tantamounts to asking regulators to 'go slow' or ignore violations. As I said in my earlier comment, self-regulation is conspicuous by its absence in India.
M G Warrier
sonia
1 decade ago
I strongly disagree with the Minister for Finance who himself was accused of shielding his son and his company in a major financial scandal (ref. the showdown in Parliament) while making it obligatory on every resident of India to account for every paisa earned and spent. It is because the public has had to rely for so long on non-existent regulators, non-existent self-regulation by companies and non-existent mechanisms for redressal of complaints (both within companies and outside of them) that today investors/flat-buyers stand robbed of all their lifesavings by thoroughly unscrupulous companies like UNITECH. Such companies rise to the pinnacle of extortion, exploitation and deceit yet call themselves ‘most ethical’ as does TATA. When someone like the Prime Minister of India himself assists companies like UNITECH cheat their way to the top through fraud and covers up their scandals by claiming ‘zero loss’ to the public (as was the case in the 2G scam), what chance does ANY complainant stand in getting redressal if it is left to regulators to decide what constitutes ‘gross violation’ and ‘criminality’ of a case? People like me have got no redressal against cunning Unitech from ANY complaint mechanism for the past 15 years (all forums for redressal are contaminated). Are we expected to waste the rest of our lives fighting for justice against powerful companies like Unitech because Minister for Finance believes self-regulation of companies is best for the public, yet self-regulation is not something he or his son themselves abide by? Does anybody see any logic in the directive he has given to regulators on the Companies Bill?
MG Warrier
1 decade ago
I AM AFRAID, INDIA IS NOT RIPE YET, FOR THE KIND OF REGULATORY APPROACH, FM IS TALKING ABOUT. SUCH AN APPROACH WILL SUIT SITUATIONS WHERE SELF-REGULATION' HAS MATURED. HERE, EVEN LAW MAKERS ENSURE BUILT-IN LOOP-HOLES TO CIRCUMVENT PROVISIONS!
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