Union Minister for Corporate Affairs Sachin Pilot has said that the mandatory spending on social responsibility projects under the new Companies Act is the best investment your company can make,and promised to keep government intervention to the barest minimum possible.
Company law singlehandedly cannot attract investments. It has to be a comprehensive ecosystem of the finance ministry,the commerce ministry,the state governments. All these add to the plus and minus of the investments coming in, Pilot,the driving force behind the new Companies Act,told a select gathering at Express Adda here on Tuesday.
The Adda,which is now into its third year,is a series of informal,intelligent conversations with men and women at the centre of change in our times. The Adda with Pilot,the youngest minister with independent charge of a ministry,was moderated by Shekhar Gupta,Editor-in-Chief of The Indian Express.
Under the Act,private firms will have to spend 2 per cent of their profit on CSR projects; PSUs must spend 5 per cent.
Seeking the co-operation of India Inc,PiIot said,I have put something in front. It will only succeed if the Indian corporate sector signs up for it. No amount of legislation or putting a gun to somebodys head…,people will find ways to go around it. If youre not able to spend that money you must explain why it is not spent? It is the board members and the management who decide what they should do.
Anything that is beneficial to society can be CSR,Pilot said. All I am saying is that please disclose it on your web site and let the board approve it. There is no inspector raj and there is no certificate required from the government.
This two per cent is the best investment your company can make.