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Regulators should intervene only in cases of gross violations by companies or when there are clear cases of criminality so that they do not get over burdened, Finance Minister P Chidambaram said today.
Speaking at the Golden Jubilee celebrations of the Central Vigilance Commission (CVC), Chidambaram said the new companies law aims to ensure transparency, better disclosures and better accountability.
"Regulator or an armed regulator must intervene and I urge that they do so only on the basis of gross violation or gross excesses or if there is clear case of criminality, he said, adding "We must keep faith in self regulation".
He further said that if any non-criminal deviation "shall be investigated or regulated by regulator, that way regulator will simply be over burdened by work and regulation will fail".
Noting that compliance need to be enforced, the Finance Minister said in cases of deviations, faith must be put on the company's board of directors and on shareholders to take action against those violating laws.
Referring to the new companies act, the Minister stressed on caution while exercising the powers.
"While I strongly support the structure of the new Companies Act, I would urge caution in the manner in which powers are exercised.
"I reiterate, we must bring self regulation, we must enforce compliance, need to heed to board of directors and shareholders and only in exceptional cases should regulator intervene to punish gross grave cases of proven criminality," Chidambaram said.
The new Companies Act, which was approved by Parliament last year, has various provisions to protect investor interests and to prevent corporate misdoings.
Later replying to questions, Chidambaram also said, "We have a problem of corruption and we have to deal with it. The belief that India is most corrupt nation is completely wrong."