As many as 8,000 listed companies registered with the Registrar of Companies are likely to come under the ambit of the Companies Bill, which is likely to be passed during the monsoon session, according to Bhaskar Chatterjee, director general and chief executive officer of the Indian Institute of Corporate Affairs.
Addressing a national conference on ‘Complying to and Leveraging Clause 135 of The Companies Bill 2012 for Maximum Impact: A Government-Industry Dialogue’, organised by the Madras Chamber of Commerce and Industry here on Tuesday, he said that companies having a net worth of Rs 500 crore or more, turnover of Rs 1,000 crore or more or a net profit of Rs 5 crore or more during any financial year would have to constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors. Of them, at least one should be an independent director.
As per the bill, the board of every company shall ensure that the company spends in every financial year, at least two per cent of the average net profits of the company made during three immediately preceding financial years in pursuance of the corporate social responsibility policy.
“If the company fails to spend the amount, the board should cite reasons for not spending the amount,” he said.
He said the activities included in Schedule VII of Companies Bill include eradicating extreme hunger and poverty, promoting education, promoting gender equality and empowering women, reducing child mortality and improving maternal health besides combating human immunodeficiency virus. The Indian Institute of Corporate Affairs is working on Schedule VII to make it accommodative and exhaustive, he said.
Chatterjee said under the new law, which is expected to be passed soon, companies are not expected to do CSR on their own. They have to outsource it to implementing agencies, he said. The non-governmental organisations are likely to benefit once the companies bill is passed. But then they have to be empanelled by the institute, he said.
With the passage of the bill, the trusts of the companies will also be placed under scrutiny to check whether they are being used for the purpose they are created.
If the law is passed, it is likely to create a huge demand for people specialising in CSR. “There is likely to be a demand of nearly one lakh people once the law is passed,” he said.