Industry welcomes Companies Bill, 2011

Companies Bill, 2012 which was passed in Lok Sabha on 18th December last year, requires that every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more, or a net profit of rupees five crore or more, during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director and the Board of every company to ensure that the company spends, in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. If the company fails to spend such amount, the Board shall, in its report specify the reasons for not spending the amount. Though not mandated by the Act, but the companies are expected to spend on CSR near the place of their business, the areas where the funds may be spent are specified, AIDS, food, education being a few of them.
Timir Baran Chatterjee, Sr. Ex. Vice President, Corporate Affairs & Legal, DIC India ltd., welcomes the bill as “a lot of attention is given on governance and many irrelevant provisions have been deleted” will take care of new business scenario, he said while speaking at a “Workshop on the New Companies Bill, 2011” organized by Bengal National Chamber of Commerce and Industry (BNCCI). Sri Amit Kumar Sen, President of BNCCI in his welcoming speech said, “For the first time, the role and responsibilities of the Directors as well as the key Managerial Persons have been clearly defined leaving no scope for ambiguity. Similarly roles and responsibilities of the auditors have been increased tremendously in the proposed Act.” Hoping that the forthcoming Act will live upto the best global practices, he is apprehensive that, “so much power has been given to the administration bypassing the judiciary, that the same may cause aberration in the future.” Chatterjee said that the bill has spelt out the “basic function of the Directors, though it doesn’t define the functions of CFO .“ He also appreciated the removal of section 297 which restricts the sale, purchase or supply of any goods, material or services between companies where a director of the company or his relative, a firm in which such a director or relative is a partner, any other partner in such a firm, or a private company of which the director is a member or director.