New Cos Bill ready, Cabinet to consider soon: Khurshid

Law Minister Salman Khurshid today said the Companies Bill, 2009, which seeks to replace a half-century-old Act, has taken final shape and Cabinet will soon take a view on it.

"I think he (Corporate Affairs Minister Veerappa Moily) has sent the Cabinet note. It takes a while for the Cabinet note to go through various processes and then come to the Cabinet. I think the final shape has been given and it should come to the Cabinet soon," Khurshid said on the sidelines of an event to mark the formation of the Corporate Knowledge Foundation here.

Khurshid, who earlier held the Corporate Affairs portfolio, also expressed hope that the Bill would be passed in the Winter Session of Parliament.

The Parliamentary Standing Committee on Finance had given its observations on the Bill in August, 2010.

The new Companies Bill, which was tabled in the backdrop of the Rs 14,000 crore Satyam fraud, promises greater shareholder democracy and stricter corporate governance norms.

For the first time, the Bill has introduced ideas like mandatory corporate social responsibility (CSR), class action suits and a fixed term for independent directors.

Among other things, it also proposes to tighten the laws for raising money from the public. The Bill also seeks to prohibit any insider trading by company directors or key managerial personnel by treating such activities as a criminal offence.

Further, it has proposed that companies should earmark 2% of their average profit of the preceding three years for CSR activities and make a disclosure to shareholders about the policy adopted in the process.

The Companies Bill (2008), which lapsed with the dissolution of the 14th Lok Sabha, was re-introduced in August, 2009.