CB BureauAlleviating all speculations, Corporate Affairs Minister Salman Khurshid on November 3 assured the industry that CSR provision in the new Companies Bill will not be mandatory in nature.
The minister said that it would not be compulsory for companies to set aside two per cent of their profits for CSR purposes, but added that the government would seek an explanation if they failed to do so.
‘What we are doing is not a directive. We are working on a target. First it was purely voluntary. Now it is going to be subject to non-compliance. Next it could be something more. Right now explanations will have to be given in the directors’ report (about) why the CSR target was not met,’ said Khurshid.
On October 11, CauseBecause had reported that Khurshid was not keen on making CSR compulsory, and would not have any mandate on it in the new Companies Bill. He had said, ‘I think CSR is a way of doing business. It is not just setting aside a certain amount, but is a part of the business itself. All such issues must be reflected in the formulation on CSR when the bill finally gets passed by parliament. This is what we are working on.’
Khurshid had then informed that the bill would also make sure that investors did not get duped. ‘Vanishing companies have stopped vanishing,’ he said, adding that the government was now looking forward to make sure companies did not vanish, and if they vanished, then those who invested in those companies would be taken care of.
Kurshid’s comments are significant because industry chambers led by CII had vociferously opposed the proposed move to make it binding upon companies to set aside two per cent of their profits for philanthropic activities.