CB BureauThe
much-awaited Companies Bill 2012, which will change the rules of governing, functioning
as well as social responsibilities of corporate groups, will be tabled in Rajya
Sabha this week.
The bill was cleared by the Lok Sabha in December 2012 but is yet to be taken up
by the Upper House even due to continuous adjournments primarily due to
walkouts by the opposition.
The government’s official release said that the Companies Bill is likely to be
introduced in the Rajya Sabha this week.
With the new legislation, India will become the first country to have corporate social responsibility (CSR) spending through a statutory provision as it makes spending
towards CSR activities mandatory. As per the proposal, companies have to shell
out two per cent of their three-year average profit towards CSR and in case they
are unable to spend the money, they have to provide a thorough explanation in
their annual report.
A
committee is already working on making rules related to implementation of the
new bill as it is unofficially being considered as ‘passed’.
‘At
present there is no legal requirement for companies to undertake activities in
pursuance of their CSR,’ Corporate Affairs Minister Sachin Pilot said in a
written reply to the Rajya Sabha.
Under
the new Companies Bill, certain classes of companies are required to formulate
a policy on CSR and to spend two per cent of their average net profit of the
last three years on such activities.
The minister said that at present there is ‘no data of such expenditure
voluntarily undertaken by the companies is maintained.’
‘The
National Foundation of Corporate Governance has, however, undertaken a study to
assess CSR activities undertaken by 10 companies selected from different
regions and sectors,’ he said.