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.
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
Fiercely independent and pro-consumer information on personal finance.
1-year online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
Fiercely independent and pro-consumer information on personal finance.
30-day online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
Fiercely independent and pro-consumer information on personal finance.
Complete access to Moneylife archives since inception ( till the date of your subscription )
M G Warrier