Monsoon Session begins: Will Companies Bill with CSR clause get through?

With just 16 working days and 44 pending bills – including the Food Security Bill – as well as discussions on the controversial Telengana issue, it seems that the long-awaited Companies Bill (conceptualized in 2011) with the mandatory corporate social responsibility (CSR) clause will not be able to become law until the winter session.

The Bill, which will replace the dated Companies Law 1956, has to pass through the last obstacle – that is, get Upper house’s nod. Although it was passed by the Lok Sabha on 18 December 2012, it has not been cleared by the Rajya Sabha. There are fears that the Bill will lapse if the existing Lok Sabha gets dissolved – which is likely with general elections just about a year away. 

News reports yesterday revealed that a group of key stakeholders including chartered accountants, lawyers, company secretaries and investors’ associations and even some companies have come together to launch a campaign to sensitize leaders in Rajya Sabha to take up the Companies Bill for discussion and clearance in the monsoon session.

Going by previous record, passing of all bills indeed looks ambitious.Since 2004, when the UPA came to power, the parliament is yet to pass 14 bills related to financial issues, 12 bills of the human resource development (HRD) ministry, 9 relating to internal security, 8 of the health ministry, 7 concerning labour issues and 6 related to agriculture.

On the other hand, Corporate Affairs Minister Sachin Pilot has assured that Companies Bill is likely to be passed in the coming monsoon session of parliament as there is broad political consensus on the legislation that aims at plugging loopholes in the system for ensuring better corporate governance and business environment.

‘This Bill has been well thought out by all the stakeholders on board. There is no question of negotiating the terms of the bill,’ said Pilot.

It is to be noted that the new Companies Bill was passed by the Lok Sabha after 11 years of deliberation and two rounds of approval of the standing committee were taken.

Once passed, the Bill will revolutionize several aspects of corporate governance including policies related to audit, transparency and requirement for independence of directors. One such pertinent change is the introduction of a mandatory CSR investment under Section 135 of the Bill. The only prominent CSR legislation India has seen prior to this Bill is Corporate Social Responsibility Voluntary Guidelines 2009.