India’s biggest industry association, the Confederation of Indian Industry (CII) has lauded the passing of the Companies Bill in Parliament today.
The bill has many provisions that bring Indian corporate laws and regulations in line with what is in vogue in more developed economies like that of the United States and Europe. It protects employees’ and investors’ interests and will make tracking financials of listed companies easier and more transparent.
It was expected that the bill may not be passed in time. CII said the timely passage was showed “the Government’s commitment to usher in the new era of corporate regulation.
“The Companies Bill as in its present form is a culmination of efforts for over a decade and we are happy that many of CII’s views have been incorporated in the legislation.” said Mr Chandrajit Banerjee, Director General, CII.
“Now that the law is ready, it is time to focus and work on the practical aspects of complying with its provisions. CII will continue to engage with the Ministry of Corporate Affairs to work out the modalities for various provisions that prescribe delegated legislation in the form of Rules. One such vital provision is surely the clause dealing with CSR spend,” he said.
The new bill makes it necessary for companies to spend a fixed proportion of their income on ‘charitable activities’ that come under ‘corporate social responsibility’. Such activities include donations, setting up of schools and hospitals etc.. The clause had found some opposition from industry.
CII pointed out that the new law is commensurate with global standards with regard to disclosure requirements, increased democratic rights for shareholders, self-regulation and accountability.
“At the same time, it also seeks to restrain the management powers of promoters, who nurture the company during its initial stages and provide the seed capital. In a country where 75-80% of the businesses are family-run/ promoter-driven, CII hopes that the new law would be able to achieve the fine balancing between ownership and management, which is crucial for success of any enterprise and also fostering the spirit of entrepreneurship,” it said.