The Ministry of Corporate Affairs said on Friday the Companies Bill 2009, which seeks to replace a half-a-century-old Act, is not likely to be passed in the ongoing Budget session of Parliament.
"We are working on the Companies Bill. But because Parliament is being cut short, so we may not be able to pass it in this session", Minister of State for Corporate Affairs R P N Singh told reporters on the sidelines of an Assocham event in New Delhi.
Singh, however, exuded confidence that the Bill will be cleared in the next Parliament session.
"But we will definitely be able to get it through in the next session," the minister said. The new Companies Bill, which was tabled in the backdrop of the Rs 14,000 crore (Rs 140-billion) Satyam fraud, promises greater shareholder democracy and stricter corporate governance norms.
The Bill proposes introduce the concept of class action suits for the first time in India, which would empower investors to sue a company for 'oppression and mismanagement' and claim damages.
Among other things, it also proposes to tighten the laws for raising money from the public.
The Bill also seeks to prohibit insider trading by company directors or key managerial personnel by treating such activities as a criminal offence.
Relating to CSR provisions stipulated in the Bill, Singh said, "My and the minister's (Minister of Corporate Affairs Murli Deora) view is that it should be made mandatory. But how to implement it will be in the hands of the industry itself".
The Bill has proposed that companies should earmark 2 per cent of the average profit of the preceding three years for corporate social responsibility activities, and make a disclosure to shareholders about the policy adopted in the process.
Industry has been of the view that they should be allowed to monitor implementation of CSR themselves without government intervention, which the Centre has accepted.
The suggestion for earmarking a part of a company's profit for CSR was floated by the Parliamentary Standing Committee on Finance, which scrutinised the Companies Bill, 2009.
Subsequently, the MCA proposed that "every company with net worth of Rs 500 crore (Rs 5 billion) or more, or turnover of Rs 1,000 crore (Rs 10 billion) or more or a net profit of Rs 5 crore (Rs 50 million) or more during a year shall be required to formulate a CSR Policy . . . As may be approved and specified by the company".
The Companies Bill (2008), which lapsed with the dissolution of the 14th Lok Sabha, was reintroduced in the Lok Sabha in August, 2009.
Subsequently, in August 2010 the Parliamentary Standing Committee on Finance gave its report after examining the provisions of the law.
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The Ministry of Corporate Affairs said on Friday the Companies Bill 2009, which seeks to replace a half-a-century-old Act, is not likely to be passed in the ongoing Budget session of Parliament.