Amend if you want your stamp on Companies Act: Pilot to new govt

Says the purpose of this legislation should not be lost while making changes to it

Amid rising clamour for changes in the new companies law, former Corporate Affairs Minister Sachin Pilot has said that the new government is entitled to make revisions to put its own "stamp", but it would be wrong to say that stakeholders were not consulted for the Act.

Pilot, who was instrumental in getting passed the new Companies Act 2013 that had been in making for ten years, also said that the purpose of this path-breaking legislation should not be lost while making changes to it.

Emphasising that the Corporate Affairs Ministry, during his tenure, tried its best to be inclusive and take concerns of various stakeholders on board, Pilot said it would be unfair to say that views of industry were not incorporated.

"Tweak it (new companies law) if you want to show your stamp in the Act, because you are in the government that is fine but you must not lose sight of the fact why the Act and sections of the Act were first passed," Pilot told PTI in an interview here.

He was responding to queries on demands from various quarters that changes should be made in the legislation.

"I think it absolutely unfair, very disappointing to say that there was no stakeholder consultation. For months, the legislation was put on the website and we tried to be as inclusive as possible in passing this law," Pilot said.

Many provisions of the legislation, which replaces the Companies Act, 1956, came into force from April 1 this year.

The industry has raised many concerns in recent months about the new legislation, including on provisions related to grant of loans, social welfare spending, financial reporting and auditing, independent directors and related party deals.

To address these concerns, the new government has already held consultations with stakeholders and changes are expected.

"It is up to the new government (to decide) what they want to do. But I can tell you that this Act was appreciated all around when it was passed in the Parliament," Pilot said.

Referring to the Act, Pilot said everything was done to be comprehensive, consultative and as inclusive as possible.

"CSR (Corporate Social Responsibility) was a major issue. Today they are trying to tweak it and I don't know what the outcome would be but I would request the Ministry and the Minister to not change the efficacy and corner stone of that Act as far as CSR is concerned," Pilot noted.

Under the new law, certain class of profitable companies are required to shell out at least two per cent of their three-year annual average net profit towards CSR activities.

"The rule making committee (for the new Act) had 16 people and only two bureaucrats. So if someone says they were not consulted then I don't have any answer to that... There were consultations at all levels," Pilot said.