core sector communique

Companies Bill 2011: Veerappa Moily stresses on CSR

Kolkata, February 6, 2012: Minister of Corporate Affairs, Govt. of India, Mr M Veerappa Moily said here that the Companies Bill 2011 seeks to update the 50 year old Companies Act, 1956, and the laws related to raising money from the public, insider trading, term for independent directors and corporate social responsibility (CSR). Companies will have to disclose the expenditure made under CSR (corporate social responsibility) head. However, he emphasized, that only reporting of CSR expenditure is mandatory and not its implementation.

Mr Moily was speaking at an interactive session on “Companies Bill 2011 - Whether it will lead to accelerated growth of corporate sector”, organized by the Calcutta Chamber of Commerce.

The Companies Bill, he said, has also streamlined the details of merger & acquisition (M&A) dispute resolution, and provides for class action suits. The Companies Bill is not a byproduct of the Satyam scam but a few things like CSR, independent directors, one-person company and serious fraud investigation were created because of the Satyam scam, he said.

Regarding M&A, the minister said a unique provision has been made in the Companies Bill. Earlier, it all depended on the RoC or the Company Law Board, but now it is all laid down. There is an approach of an autopilot in terms of the management of the affairs of the company. No proper authority was with RoC. But now, RoC has proper authority and one can directly go to Company Law Board.

“We have set a stricter role for the auditor including rotation of auditors. Auditors have some accountability and they need to work on that,” he added.

Earlier, President of Calcutta Chamber of Commerce Ms Alka Bangur said the Chamber, which was founded in 1830, is the oldest commerce and industry association not only in India but also in Asia. The Companies Bill 2011 proposes sweeping changes to the existing law. While the existing Act has more than 700 sections, the new Bill has been presented with just 470 clauses, Ms Bangur said.

“Under the provisions of new Act, much emphasis has been laid on good governance practices and better disclosures. The new law has provided for provisions for better disclosure like statement of compliances of all laws in board reports, more disclosures in financial statements and includes associated companies and joint ventures in the ambit of consolidated accounts. The Companies Bill seeks to update the laws related to raising money from the public, insider trading, term for independent directors and CSR,” she added.