Q: You have always told me that a good law stands the test for centuries. So, is this not a good law?

Shroff: A couple of things. Firstly, old laws are not necessarily bad. Shorter laws are not necessarily good. Just by taking stuff out of the sections and putting them into the rules, doesn’t necessarily mean you have shortened it. So, I think a more qualitative test needs to be applied.

But I do take Mr. Malegam’s comments that the corporate environment is a dynamic one. Things have changed since 1956, and a relook is required in some aspects. But we do need to test whether we have really relooked at it or not and we can sort of develop that as we go forward. But we’ll have to approach it from a more qualitative perspective, and not simply change for change’s sake.

Q: The famous 2003 Companies Amendment Bill actually brought in the aspect of governance, of auditor independence and all of that. So, if we were able to update the law using that kind of landmark amendment, can we not do something similar right now? Do we need to go in for a comprehensively new law?

Vasani: I can share the inside story that I was working very closely with Dr. Irani and this issue was discussed as to whether we can live with some amendments of some of the problematic areas of the ’56 Act and do we really need a new law? The consensus that emerged in the committee was that the current act is very unwieldy, the sections are badly arranged.

I’ll just give you one illustration. Provisions relating to director’s remuneration, the sections are scattered all over the Act – 198 and 309 and so on. It is just that it is very unwieldy. Undoubtedly, the whole of corporate India was feeling that while we based our ’56 Act on the 1948 English Companies Act, they had thereafter revised their Companies Act three times.

Q: The last one I believe was in 2006?

Vasani: Yes. We wanted a contemporary, modern, forward-looking company law for India. I don’t think there was any second view in the committee that you cannot just do it by tinkering with the existing ’56 Act. We needed a comprehensive relook at all the provisions to bring it in line with the global best standards.

Q: So the two words all three of you have used are contemporary and progressive. Let us check with on four or five key areas whether this new Bill that is currently pending in Parliament is actually contemporary and progressive and let me start with the area of governance which has been a hot topic in the course of this entire year, thanks to a variety of events, Satyam being one, the prosecution of Mr. Kampani being the other. How far does this Bill go in being able to create new age concepts of governance, embed them in a new law and therefore give corporate India a better framework within which to work?

Vasani: This is the one area of law if I can say that I am a little disappointed.

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