CB BureauThe Companies
Bill received the president’s assent on August 29 and
will be converted into a law to replace the Companies Act 1956. With this,
Section 135 that mandates companies to spend two per cent of their net profits
towards corporate social responsibility (CSR) will be effective starting next
financial year.
The
official statement from the corporate affairs ministry says that the ministry
is in the process of making the rules for the new legislation and will most
likely be ready in two weeks.
After
the rules are announced, the stakeholders and general public will get up to 60
days to provide their comments on the same.
Corporate
Affairs Minister Sachin Pilot had earlier said that the government planned to adopt a
transparent and interactive process to finalize a detailed set of rules to be
adopted under the new bill.
Apart
from requiring companies to spend on social welfare activities under its CSR
section, the bill empowers investors against any frauds committed by promoters,
encourages companies to have women directors, and seeks transparency in
governance matters.
CauseBecause has started a series of articles
for better understanding of Section 135. These can be read here: