Companies Bill 2008 to fix responsibility at top

By siliconindia   |   Friday, 12 December 2008, 22:48 IST   |    7 Comments
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New Delhi: Putting responsibility and accountability on the top management, the proposed Companies Bill 2008 has identified Chief Executive Officer (CEO), Chief Finance Officer (CFO) and Company Secretary (CS) as the three key managerial positions. The new bill is before the standing committee of parliament. In the current bill it is the'officer in default' who is responsible for offenses committed by a company, while the new bill is fixing responsibility to bring out the system which is more accountable, transparent and workable, reported Business Standard. As per the norm, the companies should mandatorily mention the names of holding the three key positions, which the bill recognizes, in the annual report of the company. "This is an era of self regulation where you need a team of competent professionals at helm who can be held responsible," said NK Jain, Secretary and CEO of the Institute of Companies Secretaries of India (ICSI). The draft bill also has provided relief to the honorary directors and independent directors and the non-executive members of the company. "In the existing Companies Act, the term 'officer in default' encompasses all the senior officials in a company, which include all directors both executive, non-executive and independent. In case of any offence or lapse, any one of them could be made responsible even if they have nothing to do with the actual business of the company," stated Pawan Jain, Company Secretary of the Abhishek Industries, a textiles company. "In case the company did not file any returns on complains against them, action can be taken against anyone in the company under the definition of 'offer in default' and hence the new draft Bill will give respite to companies from such incidents," added Jain. Another important step that the draft Bill has proposed is doing away with the need for central government approval for appointments and fixing remuneration of the key managerial positions. It also envisages removal of the ceiling on managerial remuneration based on net profits.