Cos Act amendments:Inter-ministerial consultations in progress

The government today said that inter-ministerial consultations were in progress to address various issues that might require amendments to the new Companies Act.
Noting that stakeholders had expressed concerns with respect to various provisions in the new law, Corporate Affairs Minister Arun Jaitley said that his ministry "is carrying out inter-ministerial consultations to address issues that may require amendment in the Act".
The minister, in a written reply to the Lok Sabha, also said that no proposal seeking a review of norms related the role of directors and responsibilities for the decision taken by the company board was "pending".
More than half of the provisions of the Companies Act, 2013, came into effect from April 1, 2014, and have elicited mixed responses.

"...Several communications were received in the ministry of Corporate Affairs from chamber of commerce and professional institutes etc drawing attention to certain practical difficulties concerning these provisions or seeking clarifications about them," he said adding that an interactive session on such issues with stakeholders were held in June.
Further, he informed the lower house that the government had subsequently issued suitable circulars, statutory orders and amendments in the rules to provide transitional time, remove doubts or practical difficulties.

To a separate query, the minister said that contributions made by corporates towards 'Swachh Bharat Abhiyan' and 'Clean Ganga Fund' would be considered as corporate social responsibility (CSR) under the new companies law.

"Swachh Bharat Abhiyan and Clean Ganga Mission have been included as CSR activities under...The Companies Act, 2013 from October 24, 2014," Jaitley said.
Further, he informed the Parliament that auditing norms under the new companies law also includes expenditure incurred on CSR by eligible companies.
"Institute of Chartered Accountants (ICAI) is developing a 'Guidance note on Accounting for Expenditure on CSR activities' that will provide guidance to auditors," Jaitley said.
He also said that as this was the first year of implementation of CSR, details of amount spent and nature of activities undertaken by the companies "would be available only after the mandatory disclosures of CSR expenditure are made by companies, which would be due after September 2015".

Certain class of profitable companies are required to shell out at least two per cent of their three-year average annual net profit towards CSR activities.