Lok Sabha approves amended Companies Bill

The Lok Sabha on Tuesday approved the Companies Bill, 2011, paving the way for a more contemporary legislation that is in accord with the changing economic and commercial environment, both nationally and internationally.

The Lok Sabha passed the new bill that seeks to replace the existing statute for regulation of companies in the country, viz, the Companies Act, 1956, by a voice vote in a marathon late night sitting.

The bill incorporates various reformatory and contemporary provisions that are in conformity with the changing economic and commercial environment. It also does away with some of the existing unwanted and obsolete compliance requirements, making compliance by companies easy and more effective.

The bill seeks to make independent directors more accountable, thereby improving corporate governance practices.

It also makes corporate social responsibility (CSR) mandatory for certain companies. Select category of companies are required to mandatorily allocate at least two per cent of the average net profits made during the three immediately preceding financial years, towards CSR.

The amended companies bill proposes that profit-making companies that meet certain conditions will be required to set aside 2 per cent of the net profit towards CSR. ''Companies should voluntarily undertake CSR and should not see this as return of 'inspector raj' '', minister of state for corporate affairs Sachin Pilot said.