Even as the Companies Bill is set to be tabled in Parliament, the corporate affairs ministry has said that it is up to the industry to decide on their corporate social responsibility (CSR) efforts.
“The government wants to have a hands-off approach as far as CSR is concerned. It is upon the companies to decide what they have to perform and they can also report that online. If they fail to do so, they will have to show the reason,” said Corporate Affairs Minister Sachin Pilot, while speaking at a chamber meeting in Kolkata yesterday.
According to provisions in the Bill, firms whose net profit is more than Rs 5 crore, net worth is over Rs 500 crore, or turnover is exceeding Rs 1,000 crore, should mandatorily spend two per cent of their net profit on CSR activities. If the company does not disburse the money, it could invite penalties.
While the Bill is aimed at making independent directors more accountable, it will also give teeth to the Serious Fraud Investigation Office (SFIO). The SFIO is expected to get the power to file cases, take action against culprits and co-ordinate with other investigative agencies such as the Central Bureau of Investigation and the Enforcement Directorate. Under the existing laws, the corporate fraud watchdog can only investigate; it can’t take punitive action.
