Financial Daily from THE HINDU group of publications
Saturday, May 18, 2002
Financial Daily from THE HINDU group of publications Saturday, May 18, 2002 |
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Corporate
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Regulatory Bodies & Rulings Government - Policy Investment mode for `producer co' in offing Our Bureau
NEW DELHI, May 17 THE Government may be allowed to prescribe any mode in which investments can be made by the "producer company'' since the proposal envisaged in the Companies (Second Amendment) Bill, 2001 restricts the investment of general reserves in approved securities, Government units and bonds only. This is stated in the Standing Committee on Home Affairs panel report which went on the Companies (Second Amendment) Bill, 2001. The report, prepared under the chairmanship Mr Pranab Mukherjee, and presented to Parliament, said the investment in zero-risk areas may not entail much profit to the members of producer companies whereas wider options are available for higher returns. Therefore, the committee suggested that suitable changes be considered in the proposed section. In response to the suggestion, the Department of Company Affairs (DCA) said that the Producer Companies would have generally the features of a co-operative society. As such the investment of co-operatives should not be made in a risky manner and may be invested as provided in clause 581ZL of the Bill. Similar provisions for investment of funds are present in other Acts also such as the Cooperatives Societies Act, 1912 and the State Agricultural Credit Cooperation Act, 1968 etc. In addition to this "we may add in sub-section (1) of Section 581ZL the following words - `or as may be prescribed by the Government', DCA submitted. The committee also suggested correction of the marginal heading of Section 581J of the proposed Bill which states `Option to Multi-State Co-operative Societies to become Producer Company''. It proposed replacing the term `Multi-State Cooperative' with `Inter-State Cooperative' as the latter term includes the former as per the definition given in Section 581 A (e) of the Bill. On the number of directors in a `Producer Company', the Section in the proposed Bill envisaged that every Producer Company shall have at least five and not more than 15 directors.
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