On Thursday, the Bill was approved by the Rajya Sabha; once it receives the president’s assent and is notified, it will replace the legislation in force currently, which dates from 1956.
That law had been amended dozens of times -- 25, to be precise -- but still had a hard time keeping up with a post-liberalisation economy.
Various other drafts of a replacement legislation have been introduced over the past years, but have been held up and then expired with the term of their respective Lok Sabhas.
This one, too, took four years to pass, and it is to the government’s credit that it persevered.
The basic changes that the new law will bring into force are long overdue.
They include higher disclosure norms, including for directors and in financial statements; updated insider trading controls; and allowing for electronic participation in corporate governance.
There are also a host of new and necessary definitions.
However, alongside these workmanlike and essential changes to the law, there are other questionable aspects to it as well.
One major problem continues to be its insistence that companies worth more than Rs 500 crore (Rs 5 billion) spend two per cent of their net profit on corporate social responsibility activity.
True, this has been watered down from an original draft -- which made it compulsory -- to now requiring that all companies flouting this provision should provide a satisfactory explanation in their annual accounts as to why they have not,
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