February 4, 2012
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Dear All The Union government has been seriously considering to bring about some major reforms in the Corporate Sector but has not been successful in doing so. The much awaited Companies Bill, 2011 introduced in the winter session was referred back to Standing Committee for review. The exercise to overhaul the Companies Bill to meet the global challenges was undertaken since 2003 and is yet to see the light of the day. It is expected that it will be introduced again in the Budget Session after a limited review. In addition to this, the efforts made to bring reforms in Tax laws by bringing the new Code i.e. Direct Tax Code and GST and IFRS implementation, etc., have not yielded any results. Similarly the Lokpal Bill meant to check corruption and people connected there with was introduced in its diluted form and the same could not be passed in the parliament. Undoubtedly, it is time not only to rewrite and reconsider many existing laws aimed at reforms but also revamp existing government procedures. On the other hand, what are being looked as positive signs and are gaining the confidence of the corporates are the recent Supreme Court verdicts. In less than two weeks, two judgments from the Supreme Court have changed the face of the industry. The path breaking judgements re-established the independence of the India judiciary. The Vodafone judgement in particular will provide tremendous certainty to investors and also boost cross-border M & A s, inbound and outbound investments thereby having an economic impact on India. Some of the recent major policy decisions by the Government which are expected to provide impetus to the Indian Inc. growth story are as under:
- Improve the stock market by allowing Qualified Foreign Investors (QFIs)to directly invest in Indian equity market in order to widen the class of investors, attract more foreign funds, and reduce market volatility and to deepen the Indian capital market.
- Allow 100% FDI in single brand retail.
- Offer for Sale of Shares by Promoters through the Stock Exchange Mechanism in order to facilitate promoters to dilute/offload their holding in listed companies in a transparent manner with wider participation.