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At the national council meet of the Confederation of Indian Industry, Pilot candidly discussed various issues, concerns and suggestions on the new law, to a hall filled with around 120 seniors in industry. These included Infosys’ S Gopalakrishnan, Adi Godrej, Rahul Bajaj, Kiran Mazumdar-Shaw and Sunil Kant Munjal.
Pilot’s ministry is in the process of framing rules to implement the law, a matter of wide concern for Indian business. It has notified 98 sections of the Act (some more are yet to be done) and has issued two separate sets of draft rules, seeking feedback from industry and other stakeholders. Business leaders have raised various concerns at some key provisions. The new law has been in the news for some of the pioneering provisions such as those on compulsory corporate social responsibility spending, auditor rotation and inclusion of independent directors on the managing board.
The meeting on Thursday mostly focused on these issues. Suggestions to the minister covered a wide range. For instance, Bajaj raised concerns related to the mandatory rotation of auditors every five years, even by unlisted companies. He also asked that religious contributions be considered part of CSR.
In general, industry was anxious that the ease of doing business, already considered low (“already poor”, was what Adi Godrej said) should not be further negatively impacted in the implementation of the new law.
“To start with, rules should be liberal and threshold levels should be high, especially for unlisted companies,” said Godrej.
Pilot, who candidly addressed each of the concerns individually during the two-hour discussion, sought written suggestions and assured that rules would be amended where required. “We do not intend to make business difficult. Thresholds will be prescribed in consultation with industry. The idea behind the law is to bring in transparency and provide investor security,” he said.
Intricacies such as applicability of related party transactions to CSR initiatives, contribution to the corpus of Trusts, the process of transfer of pending proceedings to the proposed National Company Law Tribunal from the Company Law Board, allowing CSR spend as an expense item, loans and investment to private and subsidiary companies and so forth were also discussed. CII is to give a detailed representation to the ministry.
