By IANS,
Kolkata : Expressing confidence that the new companies bill will be passed in parliament’s budget session, Corporate Affair Minister Veerappa Moily Monday said the central government is not making the corporate social responsibility (CSR) spending mandatory.
“I am confident that the new companies bill will be passed in the budget session. The standing committee on finance, headed by Yashwant Sinha, had already submitted a report,” Moily said at a programme organised by the Calcutta Chamber of Commerce here.
The new companies bill was referred to the standing committee December last year after opposition parties demanded a fresh scrutiny.
The new bill, which seeks to replace the Companies Act, 1956, will introduce new provisions, covering areas such as CSR, class action suits and a fixed term for independent directors.
Some political parties are putting pressure on the government to make two percent CSR spending mandatory for corporates.
But Moily said that the government was not going to do so.
“There is some apprehension from the part of the corporate bodies that we made it mandatory… but it is not so. Compliance is not mandatory but reporting is mandatory,” he said.
Currently, the clause suggests that large companies would have to earmark two percent of their three-year average profit on CSR activities. But failure to comply by the norm would not attract penal provisions, and the companies will just have to mention the reason in their annual report.
Earlier, in a programme organised by industry body FICCI, Moily said he was hopeful that the cabinet would give the Competition Policy its go ahead in March and the National Corporate Governance Policy to be ready in “the next 6 months.”
International financial reporting standards would be enforced by 2015, he said adding these initiatives were part of the second generation of economic reforms.