The deadlock between the industry and the government continues over mandatory corporate social responsibility (CSR) and role of independent directors, despite the minister of corporate affairs, Murli Deora, claiming that the Companies Bill 2009 is ready to be presented in Parliament. "The draft of the Bill is ready and it has been sent to other ministries and a copy has also been sent to industry representatives for their comments. However, there are certain issues that are unresolved and the pressure from the corporate houses continues," a senior official from the ministry of corporate affairs told Mail Today.
Ministry officials said the Bill is likely to be sent for cabinet approval in June and is expected to be tabled in Parliament in the forthcoming monsoon session. "The various other ministries, including finance, are still of the view that CSR should be made mandatory, while corporate houses are opposed to it. The role of independent directors is another major issue. Unless these two are resolved, tabling the Bill in the next session seems difficult," the official said.
Earlier, corporate houses had opposed the provision in the Bill that made it mandatory for the companies to spend three per cent of their net profit on CSR. As a result, the Bill could not be presented in the last session. Deora proposed the removal of the clause once he took charge of the ministry. This, however, has not going down well with the other ministries with even the Parliamentary standing committee underlining the need to make CSR mandatory. Another bone of contention is the role of independent directors.
The Companies Bill proposes that independent directors will be accountable for all board level decisions that may lead to lack of governance or discrepancy in future, whether or not they are present when these decisions are made.
"There is lot of opposition from corporate houses on that as they feel that if the clause is introduced not may people will be willing to join as an independent board members. This they feel will undermine the purpose of having independent directors in the company," the official said.
The Bill, which proposes to protect investors, is also going to introduce the concept of class action suits which will empower investors to sue a company and claim damages in case of mismanagement.
Courtesy: Mail Today