ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Institutional Intervention in Company Affairs

Institutional Intervention in Company Affairs K T Merchant TILL a couple of years ago, financial institutions like the HC did not take, any interest in the management of companies in which they held shares. The managements had their way as the Board of Directors mostly consisted of their own nominees, all belonging to the small 'charmed circle', there being hardly any really 'independent' directors. In rare cases, where there were 'independent' directors, they were in a helpless minority and quite ineffective. Thus, the interests of the small shareholders were neither represented nor safeguarded. The Company Law Board was and is supposed to be a watchdog and is expected to act in their interests but it interpreted the law narrowly, took a technical view of things and more often than not rubber-stamped the decisions of the management All this, coupled with the general apathy of the vast majority of scattered shareholders and the strong entrenched position of managements which always armed themselves with a large number of proxies, enabled managements to ride roughshod over opposition, when there was any. Directors nominated by the government, banks and institutions which had given loans to the companies concerned sat on the Boards for the specific purpose of safeguarding the repayment of the loans and did not bother about any other aspect of management. As one of the leading institutional lenders told this author, they were not there to rnanage the company for others.

Payments to Auditors-Likely Effect on Objectivity

Freight Assistance for Exports I HAVE read with interest your comment "Exports without Subsidy" (April 24, 1971, p 848) on the abolition of cash assistance on exports of cottonseed decorticated expellers and extractioas. You say:

Management Change in Companies-A Comment

ium arid plastics cm a larger scale than at present Between 1947 and 1954, the use of copper for industrial purposes declined by 14 per cent while that of aluminium rose by 104 per cent in the US.12 Copper is being increasingly replaced in all the countries by aluminium in the electrical engineering industry which consumes about one half of the world supply of copper. In tube makings and domestic water systems, the principal competitor to copper is plastics, In India too, copper is being increasingly replaced by aluminium in the elec- trical industry and cable industry and by brass and stainless steels fn the utensils industry. Copper is also being substituted by plastics in some of its other uses. The major import substitution is by aluminium in the electrical industry. The limit to this substitution is set only by technological factors but the Government is all out to encourage such substitution. Thus, while the consumption of aluminium has itself gone up 10 times from 12,000 tonnes in 1951 to 124,000 tonnes in 1967, its use in the electrical industry rose from 20 per cent of total aluminium consumed in India noted already, while the production of

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