Deora bats for mandatory CSR, rotation of auditors

Meets industry leaders for consensus on the companies bill

Corporate affairs minister Murli Deora will pilot the new companies bill in the budget session starting next week. The ministry has proposed mandatory 2 per cent corporate social responsibility (CSR), mandatory auditors rotation and other corporate governance norms. Deora met top industry people to hammer out consensus on other pending issues relating to companies bill on Thursday.

Speaking on the occasion, Deora said ministry is in no mood to relent over the mandatory 2 per cent CSR issue.

But there were some suggestions made by the industry sector in this regard, which the ministry would try to incorporate in the new draft.“I certainly feel that there should be a mandatory CSR across the sector and while being the petroleum I had also worked in this regard and had made 2 per cent CSR a mandatory in the sector,” Deora said.

Majority of the industry has endorsed the ministry’s opinion on CSR. “Some industry people have their apprehensions in this regard, which the ministry will sort out soon,” Deora said.

“We are ready with the bill only last bit of tweaking to incorporate some new industry suggestions on some of the important issues remain. We are trying to get everyone on board for making two per cent on CSR mandatory,” said union minister of state for corporate affairs, RPN Singh after an interactive session with corporate sector.

Some of the major issues, which remained contentious during the discussion, the minister said, included: mandating 2 per cent corporate social responsibility (CSR), rotation of auditors, international financial reporting standards (IFRS), voting rights for independent directors and direct tax.

“There are around ten issues, which remain unsettled, we have heard the industry suggestions and now we have 2-3 days to re-look in all the issues before the final draft is out for the cabinet approval,” Singh added.

However reacting strongly on mandatory CSR, chairman corporate affairs committee of Ficci, chairman Xpro India Sidharth Birla, said that the CSR practice should be pushed but making it a mandatory norm might not work the way it looks.

“Companies may find ways to shy away with such mandatory norms, which would at the end make the whole purpose futile,” Birla Said.

While talking to Financial Chronicle, group general council and company secretary at Bharti Vijaya Sampath said the companies should be allowed to voluntarily continue the practice of CSR as undertaken by the industrial sector.

“For transparency in the efforts the companies can come out with their annual spending data on various social projects at the end of each financial year,” Sampath added.

The Parliamentary standing committee on finance, which examined the companies bill, 2009, had recommended a 2 per cent mandatory corporate social responsiblity on profits during the preceding three years for CSR spending or disclose to the shareholders why the same has not been met.