The much awaited Companies Bill 2011 will require further fine tuning before it can get the approval of the Union Cabinet.
The Cabinet on Tuesday deferred a decision on the Bill following objections by the finance and law ministries. It is learnt the objections were related to the newly introduced provisions regarding the corporate social responsibility norms. The jurisdictional issues with regard to the role of Securities and Exchanges Board, the Central Board of Direct Taxes and certain statutory provisions under the proposed Bill were also contentious matters.
Briefing the Cabinet decisions, Ambika Soni, minister of information and broadcasting, said the deferment was technical in nature. “There is no difference of opinion. Some of the Cabinet members had some queries on certain issues. It will be clarified and the Bill will be back for Cabinet approval within a week or 10 days,” she said.
Corporate Affairs Minister M Veerappa Moily declined to speak on the matter.
He is expected to sort out the matter with Finance Minister Pranab Mukherjee and Planning Commission Deputy Chairperson Montek Singh Ahluwalia before the Bill goes back to the Cabinet.
The Bill, once approved by Parliament, will lead to the comprehensive revision of the sixty-year old Companies Act, 1956. It aims at providing a clearer framework for good governance by strengthening the powers of all stakeholders, including that of minority shareholders. The Bill also provides greater flexibility in procedural aspects to turn Indian company laws at par with the internationally accepted standards.
Much of the changes in the Bill happened after the Satyam accounting fraud, where the promoters admitted to having manipulated the financial accounts to provide a rosy picture of the software firm.
The amendment has been in the offing for nearly 10 years now, with successive governments working on improved versions of the Bill.
The Bill was referred to the Parliamentary Standing Committee in 2009 and the ministry had incorporated most of the suggestions of this committee while finalising the current version of the Bill.
The Parliamentary panel had recommended the introduction of mandatory CSR spend for corporates. However, the corporate affairs ministry had later attempted to turn it more industry friendly by making CSR spend reporting mandatory.
