Companies (Amendment) Bill, 2019 passed in Parliament
The Bill seeks to tighten Corporate Social Responsibility (CSR) compliance and re-categorisation of specific offences as civil offences.
The Companies (Amendment) Bill, 2019 has been passed by the Parliament with the approval of Rajya Sabha. The bill was already passed by the Lok Sabha with a majority of votes.
The Bill aims to bring about key changes in the Companies Act, 2013. The Bill seeks to tighten Corporate Social Responsibility (CSR) compliance, re-categorisation of specific offences as civil offences and transfer certain responsibilities to National Company Law Tribunal.
The Bill was moved by Finance Minister Nirmala Sitharaman in the house. While replying to a question in the Rajya Sabha, Nirmala Sitharaman said that bill aims to tighten CSR norms and ensuring stricter action for non- compliance of the company law regulations.
Major Highlights of the Companies (Amendment) Bill
• A major focus of the bill is on CSR spending. Now companies have to keep unspent money in a special account.
• The Companies (Amendment) Bill, 2019 highlights that companies with a profit of more than Rs 5 crore, turnover of Rs 100 crore and net worth of more than Rs 500 crore have to spend at least 2% of their 3 years annual average net profit towards CSR activities.
• The Bill gives more power to the Registrar of Companies (ROC) to take strict action against those companies which are not working as per the law. Registrar can remove the name of the company from the Register of companies if it is not carrying on the operation as per the company law.
• Sixteen minor offences have been re-categorised as civil defaults and transferring of functions with regard to dealing with applications for change of financial year to Central government.
• Shifting of powers for conversion from public to private companies from National Company Law Tribunal (NCLT) to the central government, as well as more clarity with respect to certain powers of the National Financial Reporting Authority (NFRA).
It is a management concept where companies integrate social and environmental concerns in their corporate operations. Some major CSR concerns are - social equity, human rights, gender balance, environmental management, good governance, community relations and anti-corruption measures.