State governments cannot interfere with companies’ independence on corporate social responsibility spending, said Union Minister of State for Corporate Affairs Sachin Pilot.
The Union Government had made it mandatory for companies to spend 2 per cent of net profit on CSR only to bring in transparency of corporate role in social development. But companies have the final say in deciding on what they spend their money on, he said.
Pilot said the corporate sector had expressed concern that some State Governments were considering asking companies to contribute to the Chief Minister’s relief fund.
Addressing the inaugural of a conference on corporate governance, he said the rules under the New Companies Act 2013 are being notified in stages and will be fully in place by January .
Whether it is CSR or decisions on the role of independent directors , the objective is to improve corporate governance to global standards. The law will create the correct environment for sustainable growth of corporate sector.
B. Muthuraman, Vice Chairman, Tata Steel, said the corporate sector was committed to CSR, but was worried on the mandatory nature and implementation process. Some State Governments were seeking contributions from CSR funds. Companies, on their part, need to provide human resources and funds to concentrate on CSR as much as on core activities.
At the event organised by the National Foundation for Corporate Governance, an agreement was signed between the Institute of Directors, UK, and Indian Institute of Corporate Affairs, to improve capability in corporate governance.