The draft for the much awaited Companies Bill, which seeks to replace the existing act, is finally ready. The ministry of corporate affairs has sent it to other ministries for their comments before it is sent to the cabinet. It is likely to be sent for cabinet approval in June. "All critical issues have been ironed out with the industry," Murli Deora, minister corporate affairs told HT.
Much to the relief of corporate India, the new Bill does not propose to mandate companies to spend up to 2% of their net profits on corporate social responsibility (CSR). However it has made a mention of the same. The Parliamentary standing committee had underlined the need to mandate firms to spend on philanthropic activities. The bill is expected to be tabled in the Parliament in the forthcoming monsoon session.
The new bill also seeks to protect the rights of minority shareholders while bringing over self-regulation and adequate disclosure and accountability. It also underlines the need for lesser government control over internal corporate processes.
Besides, the role of independent directors has been clearly specified in the new bill.
Under the new Companies Bill, these directors, present or absent, will be held accountable for all board level decisions, which may lead to lack of governance or discrepancy in the future.
The number of company boards on which an independent director could be engaged will also be brought down from the current 15.