corporate Democracy

CORPORATE DEMOCRACY
We should not wait for this until the Companies Bill 2011 passed and introduced
Recently we talk and discuss about CORPORATE GOVERNANCE but it is essential to have Corporate DEMOCRACY to implement corporate Governance.

Discussion is going on, with regard to Section 297 of the Companies Act, 1956 to implement the circular for authorizing Registrar of Companies to process the applications.
There are several sections in the Companies Act which we refer as bribe breeding sections. Section 297, 370 and 372 of the companies Act are some of them, Both Section 370 and 372 of the Companies Act, dealt with investments, guarantee and inter-corporate loans. Earlier over and above 30% of the limit prescribed under these sections, we are required to get approval from Central Government Department of Company Affairs located at New Delhi. For making investments, guarantees etc, we are not required to get approval from shareholders. This procedure was continued upto October 1998 . The then Government has brought an ordinance to amend these two sections discontinued approval from central govt instead insisted for members approval by means of Special Resolution. Thus, corporate democracy was introduced in these sections.. When Companies Amendment Act was passed during the year 1999, the same was incorporated and when you see the section giving retrospective effect i.e 31st October 1998 by introducing section 372A in lieu of sections 370 and 372 of Companies Act, 1956. Now there is no requirement to get approval under section 372A from Central Govt..Members approval by means of Special Resolutions is sufrficient for any amount . Members decide and not Government
In the similar way, Section 297 of the Companies Act, 1956 is another bribe breeding section wherein related party transactions , we are required to get approval from respective Regional Directors. The limit fixed under the section was paid up capital of Rs.1 crore which was fixed in the year 1956. After that so many amendments came into effect, the section was untouched. Some of the RD office officials say that Section 297 of the Companies Act, 1956 is A.T.M. i.e Any Time Money for them and how can Regional directors power will be transferred to Registrar of Companies.Is it corporate democracy? Is it necessary Regional Director has to decide from whom to purchase or sell the company’s products or avail services. I think it is not relevant at current economic liberalization and so many reforms process for automatic investment for country’s reform process. In this context the section 297 limit has to be increased to RS.15 crores.
Suggestion:

Currently Parliament is in Session, once after session is over,The Government should bring ordinance to that effect to increase the limit of Rs.1 crore to Rs.15 crore. Less applications will come to Regional Directors office and the bribe breeding section will also vanish atleast diminish.

or

The recent circular should be given effect and approval should be automatic and no question should be asked and approval should be given within SEVEN DAYS