It is widely acknowledged that the
Companies Act 1956 needs to be re-written comprehensively.
Some work has already been done. I intend to constitute a
small drafting team comprising persons with knowledge of law,
economics and company affairs to prepare a new draft and make it
ready for public debate. My deadline is January 1, 1997.
In the meanwhile, I propose to introduce some urgent
amendments to the present Act to provide for the following :
Companies defaulting on payment of interest
or repayment of principal on deposits will
be debarred from raising further deposits
until these defaults are remedied.
The present ceiling of Rs.1,000 on the claims
of arrears of wages and salaries of employees
in case of winding up of a company is
absurdly low. This will be enhanced.
Mutual funds and venture capital funds will
be permitted to vote in respect of their
holdings in companies.
Non-voting shares will be permitted upto 25%
of the issued equity capital. This will go a
long way in meeting the demand for a level
Companies in the infrastructure sector will
be allowed to issue shares that are
redeemable after the expiry of a period of 20
years from the date of issue.
Hon'ble Members will agree with me that these
changes are necessary and should be introduced right away. Next
year, I shall come back to the House with a new Companies Bill.
In order to achieve competitiveness, Indian
industry must be given easy access to improved technology. At
present RBI accords automatic approval for technology imports
subject to the requirement that royalty will be limited to 5% on
domestic sales and 8% on export sales and that the lump sum
payment does not exceed Rs.1 crore. All other cases require case-
by-case approval by the Central government. Industry has
represented that the Rs.1 crore limit for automatic approval
needs to be increased. Responding to this demand, it has been
decided to increase this limit to $ 2 million (equivalent to
about Rs.7 crore). With this liberalisation, a large number of
technology import cases will not have to come to government.
The Industrial Reconstruction Bank of India
(IRBI) was constituted to function as the principal credit and
reconstruction agency. Thanks to rapid changes, the burden of
reconstruction is being shared by different stakeholders
including development financial institutions and banks. I,
therefore, propose to transform the IRBI into a fulfledged, all-
purpose development finance institution with headquarters in
Calcutta. I will soon bring the necessary changes in the statute