Zia Mody, founder, AZB and Partners welcomes, on CNBC-TV18, the tabling of the new Companies Bill with clauses that bring in sharper focus on corporate governance and CSR initiatives.
Below is an edited transcript of the analysis on CNBC-TV18
Q: After years of dithering, there will be a new Companies Bill?
A: Yes, years after 1956.
Q: Though the fine print is still awaited, a lot of the issues have been publically discussed and debated. How significant are the changes that are being proposed? What is your opinion?
A: I think the Bill does mention some good initiatives. Clearly, there is a sharper focus on governance and the Bill lists clauses that may trouble corporates like the possibility of class-action suits being institutionalised. The oversight that the government and the legislature wants to put on independent directors and not to have the worries of being sent to the dock every time, that balance seems to have been achieved well.
We will have to see how the corporate social responsibility (CSR) clauses are implemented though the concept is laudable. It should be ensured that the CSR initiatives in the Bill are not get bogged down in complicity between companies or lead to too much government intervention.
Q: That was the position that was being taken by the young minister in Parliament that the government wants to adopt minimal intervention when it comes to mandating corporate social responsibility (CSR)?
A: That's good. That's how its should be dealt with to make it a part of the company’s philosophy and outlook being too rigorously thrust down one's throat.. I think the other concern that corporate India continues to have, is the limitation on the level of subsidiaries placed by the Bill and there seems to be no logic for not being able to have as many downstream subsidiaries as a company likes. One will have to see how inconvenient that is for corporate India and whether it is willing to live with it.