Co audit reports to be revealed

With regard to sharing the contents of the audit committee report, the sources clarified that the board of directors might differ with the objections, but they would not be able to hold back information from the shareholders. The proposed amendments will make it mandatory for the board of directors to share the contents of the audit report with the shareholders along with their comments.

The amendments have also made it mandatory for companies to deposit interim dividend in a special bank account, as is being done in case of dividend. The companies will also be required to pay the interim dividend to the shareholders within 30 days.

The amendments have also made provisions for introduction of postal ballot and use of electronic voting machines at the annual general meetings of the companies.

Sources further said that under the proposed provisions Securities and Exchange Board of India (SEBI) would carry out inspection of balance sheets in respect of transactions relating to capital market activities. In such matters the companies will be required to submit the reports to the SEBI.

The government has, however, postponed certain contentious issues to a later date. Sources said that the issues concerning winding up of companies has been put on hold pending submission of the Eradi Committee report which was in the process of being finalised.

Also the issue concerning representation of small shareholders on the board of companies has been put on hold. According to official sources, in-principle there was objection to the small shareholders having a representative on the board. Even in case of banks, employees and officers have their representatives on the board. However, the modalities are needed to be worked out in detail before accepting such a proposal. Similarly, the issue pertaining to women directors on the board needed to be debated.