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A day after the new Companies Bill 2011 was cleared by the Cabinet after a two-year wait, the Minister of Corporate Affairs, Mr Veerappa Moily, stated that he was hopeful that the Bill would be passed in the ongoing winter session of Parliament.
He was speaking at the sidelines of the CII-ITC Centre of Excellence for Sustainable Development Annual Summit on Friday.
“The objectives of the new Bill include taking care of the transparency issue and emerging needs in corporate governance. Through more stress on Corporate Social Responsibility in the Bill we have tried to institutionalise the culture of transparency. Thus a new change will take place for the takeoff of the corporate world,” he added.
The Companies Bill 2011, provides for tighter disclosure norms, stricter penal provisions, greater shareholder democracy and introduces the concept of Corporate Social Responsibility for the first time. Under this provision, companies would need to earmark two per cent of their profits of the previous three years for CSR activities and make a disclosure of it in their balance-sheets.
It also proposes to introduce the concept of class action suits for investor protection as well as a fixed term for independent directors and their liability in a company.
The Bill will replace the existing Companies Bill 2009, which will be subsequently withdrawn. The reforms in the Companies Act, 1956 were initiated after a series of white-collar crimes, including the Satyam accounting fraud.
Mr Moily also unveiled the report, ‘The Next in Corporate Governance Sustainability Embedded' prepared by the CII-ITC Centre of Excellence for Sustainable Development on Friday. The report is supported by the Ministry of Corporate Affairs and National Foundation of Corporate Governance.
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