A bill has been moved in Parliament for exempting independent directors of companies from criminal and civil liabilities, if they are not involved in the day-to-day functions of the company. Christened Companies (Amendment) Bill 2009, it was moved last week by YP Trivedi, a Rajya Sabha member from the Nationalist Congress Party (NCP).
Mr Trivedi, who is on the board of several companies, including Reliance Industries (RIL), told ET that he expects to get sufficient support in Parliament to pass the bill. The proposed bill, however does not seek a retrospective effect to the amendment sought in the Company's Act. The issue of the liability of independent directors has been in the news ever since well-known investment banker and JM Financial's chairman, Nimesh Kampani was named by the Andhra Pradesh police in the Nagarjuna Finance scam case. Mr Kampani resigned from the board of Nagarjuna Finance in 1999. The amendment Bill seeks to absolve those independent directors who are not involved in the day-to-day functioning of the company or those who are not involved in any corporate action carried out in violation of laws. Referring to the 'Statement of Objects and Reasons' of the Bill, Mr Trivedi said: "It is also observed that non-executive independent directors are often harassed for the wrong doings of the full-time executive directors who are hands on with the day-to-day administration of the companies. It has, therefore, become necessary to immediately make provisions in the existing Companies Act to effectively protect the interests of the community of independent directors in the larger interests of healthy growth of corporate governance." He told ET that the bill was not seeking to protect those independent directors who are involved in a company's wrongful activities. "Such independent directors should be taken to task," he said. Of late, independent directors have been summoned by law enforcement agencies even for issues where their involvement is rather limited. "Many independent directors who are on the board of several listed companies have gone through the harrowing experience of attending court hearings pertaining to cases which is outside their purview, like cheques bouncing," said a senior independent director. (07-Aug-09) Economic Times thanks, mukesh jain. -- email: mukesh.jai...@gmail.com mob: 919977165123 to read articles, circulars, books, titorials, and lot more related to PWD's visit my site: http://www.mukesh.myehome.in to know about my efforts of sketching the life of mumbai visit: http://www.themumbaicity.webs.com To unsubscribe send a message to accessindia-requ...@accessindia.org.in with the subject unsubscribe. To change your subscription to digest mode or make any other changes, please visit the list home page at http://accessindia.org.in/mailman/listinfo/accessindia_accessindia.org.in
