There is some clarity on the Corporate Social Responsibility (CSR) norms for Corporate India. The final Cabinet note of the Companies Bill suggests that corporates will have to give preference to local aeras, reports Ronojoy Banerjee of CNBC-TV18.
India Inc will be relived by the final Cabinet note that the ministry of corporate affairs (MCA) prepared last week. According to the sources it is known that the ministry in the Cabinet note has clearly said that there is no question of making the CSR provision mandatory. However, they have said that an explanation would be required if the companies do not spend the required 2 percent of their net profits on CSR activities.
Sources indicate that some big changes may come up in this CSR provision, like the companies will be required to give preference to the local area within which it operates.
For example, if a company has a mining plant in Chhattisgarh it should not ideally undertake CSR activities in Maharashtra alone. It also has to look into the development of that area.
Another change which can appear in the note is that an individual can be an auditor of at most 20 companies. There was already a cap as far as the number of companies a director can be a part of, the same clause will now also apply in case of auditors.
Also, MCA has rejected the definition of 'a listed company' that the committee had submitted because the finance ministers has also opposed. The ministry officials are very hopeful that the cabinet will clear the bill tomorrow.