Monday, November 15, 2010

CII- RECOMMENDATIONS ON THE COMPANIES BILL 2009


  • Rotation of audit firms should not be made mandatory.
  • Pyramid Structure  on the recommendation of the standing Committee of dismantling the pyramid structures of companies, CII is of the view that no such restrictions should be imposed. Allow flexibility of corporate planning, structuring and business operations as per CII.
  • CSR should be left to the board. Promote voluntary CSR backed by Government recognittion and honour.
  • Independent Directors Recommendations  The committee had suggested that independent directors should not be entitled to stock options in order to preserve their independence. CII is of the opinion that the board should be free to design remuneration structures, including stock options subject to shareholders' approval.
  • Tenure The tenure of independent directors should be left to the board and shareholders to decide. It may be fixed by companies in their Article of Association, said CII. The committee had recommended a six- year tenure for the independent directors with a lapse of three year in between two tenures with the same company.
  • Directors Responsibility  CII recommends that non-obstante clause should be incorporated in the bill to exclude non- executive directors, including independent directors from any criminal liability for the offences committed by the company. This provision should have overriding effect on all other laws. The committee had not suggested immunity from other laws for independent directors. The liability of independent directors would arise only when any act of omission or commission occurred with his knowledge and consent or connivance and where he had not acted diligently, the committee had said. CII recommends that devolution from liability should also be extended to non-executive directors.

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