DCA URGES GOVERNMENT COMPANIES TO LEAD IN STATUTORY COMPLIANCE

    In a letter addressed to Secretaries of various Union Ministries and State Governments, the Secretary, Department of Company Affairs, Shri Vinod Dhall has urged them to instruct companies and undertakings under their administrative control to comply with the Companies Act for hassle-free corporate governance. He has told them that exemptions and relaxation from his Department should not be taken for granted and will, in any case, not be given without the strict examination. The Government companies are already exempted from several provisions in terms of Section 620 of the Companies Act.

    Shri Dhall has requested them to ensure timely statutory compliance by the Directors and management of the Government companies. In this connection, Shri Dhall has said that the fact that the law contains provisions for penalizing violations of the Companies Act should also be fully understood by the management and directors, in particular, the provisions which impose a personal liability on managers and/ or directors.

    Shri Dhall says that the mass of applications sent by Government companies reflects a lax attitude towards the discipline legislated by the Companies Act. The objective of the statutory requirements is to bind the companies to make timely presentation of a true and fair picture of the state of affairs of the company at any point of time. This is an essential aspect of good corporate governance. This purpose is defeated if the companies routinely seek exemption, he added.

    It has been observed that large number of Government companies routinely apply for relaxation of, or exemption from, provisions of the Companies Act, 1956 that are statutorily binding upon such companies. Such applications are being received from both Central Government companies and State Government companies, more particularly the latter.