Company law to be revisied - Expert Committee Appointed

The committee was constituted by the Government of India Resolution No. 23(71)-Law (C.L.)/48 on 28th October 1950 under the chairmanship of Shri C. H. Bhabha. It was formed to revise the Indian Companies (Amendment) Act, 1936 based on various representation of views of the state governments and organized industrial and commercial bodies on the reports of Shri Tricumdas Dwarkadas and Shri V.K. Thiruvenkatachari. The committee proposed a major amendment in the definition of “Debenture”.

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The Securities and Exchange Board of India (SEBI) has framed rules to register and regulate stock dealers, share shoppes, and unauthorised stock exchanges under Section 12 of the SEBI Act. These rules are proposed with a view to redressing the grievances of investors in semi-urban and rural areas who have been experiencing difficulties in getting services for disposal of securities or consolidating odd lots. The regulations impose a statutory duty on stock dealers to deal only on a spot delivery basis and issue receipts in a specified form. Additionally, every applicant eligible for grant of a certificate must pay an initial fee of Rs 50,000 to keep the certificate in force. Stock dealers will have to submit information relating to their activities as and when required by SEBI.

The government has amended the Securities Contracts (Regulation) Rules, 1957, to allow a company to become a member of a stock exchange if it satisfies certain conditions. The conditions are that the company is formed in compliance with the provisions of section 322 of the Companies Act, that a majority of the directors are shareholders of the company and members of the stock exchange, and that the directors have "unlimited liability" in the company. Under the amended rules, notified in the Gazette of India Extraordinary, the stock exchanges would admit these members on the recommendations of several financial institutions, including the Industrial Finance Corporation and the Industrial Development Bank of India