The government will introduce the new Companies Bill in the Budget session of the Parliament beginning on the 21st and mandate international accounting rules in the new year, officials said. The ministry of Corporate Affairs also said there would be no mandatory provision requiring companies to spend 2% of their profits for social welfare purposes, as recommended by the Parliamentary Standing Committee on finance.
“If the budget session is not washed out due to protests, we will definitely introduce the bill in the session,” said a ministry official, pointing out that the draft is currently undergoing vetting at the ministry of law. The official also said the bill, as framed currently, does not make it a legal requirement for companies to allocate 2% of their profits for community welfare activities as was being speculated.
“It won’t be mandatory.. though the bill will urge them to do it. The industry wants incentives such as tax-cuts to the equivalent amount if they do spend money on social welfare activities,” he added.
The ministry on Tuesday also announced that it was removing three disclosure requirements imposed on unlisted companies at present in response to demand from the industry. The first is with regard to furnishing the accounts of all subsidiaries along with those of the mother company, the second is to furnish details of the exact quantities of production and other aspects and the third is with regard to getting the ministry’s clearance for management salaries.
“These requirements date back to an era when there were industrial licensing etc.,” the ministry said on the abolition of the quantitative disclosure requirements, “and there were a regulatory purpose in monitoring quantitative aspects of production.”
It also pointed out a substantial number of the applications it receives are for clearing the pay-packets of management staff at unlisted companies. “The ministry’s limited manpower is disproportionately involved in this exercise,” Murli Deora, the new minister for Corporate Affairs said.
Deora also said more changes will be announced to simplify the regulatory requirements for setting up and operating a business in the country in the coming days.