Bill To Amend The Companies Act In Order To Penalize Firms For Not Spending CST Funds Tabled In The Lok Sabha
[ By Bobby Anthony ]A Bill has been introduced in the Lok Sabha to amend the Companies Act in order to penalize companies and officials, if funds meant for corporate social responsibility (CSR) remain unspent.The same Bill also seeks to empower the central government to debar directors responsible for mismanagement of companies for a period of five years, after approval from the National...
A Bill has been introduced in the Lok Sabha to amend the Companies Act in order to penalize companies and officials, if funds meant for corporate social responsibility (CSR) remain unspent.
The same Bill also seeks to empower the central government to debar directors responsible for mismanagement of companies for a period of five years, after approval from the National Company Law Tribunal (NCLT).
The Bill has proposed that unspent CSR funds be carried forward to a special account and spent within three financial years. Companies will be expected to open bank accounts called the ‘Unspent Corporate Social Responsibility Account’.
If the money remains unspent in three years, it would be transferred to any fund specified in Schedule VII of the Act like the Prime Minister's National Relief Fund or any other fund set up by the central or the state governments for socio-economic development and relief.
Company officials who fail to adhere to these provisions would be fined in the range of Rs 50,000 to Rs 25 lakh. They could also be imprisoned up to three years and fined to the tune of Rs 50,000 to Rs 5 lakh, as per the Bill.
Following irregularities in the IL&FS, the Bill also proposes to empower the government to debar errant directors of the companies for five years to hold the similar posts in any company.
The Bill proposes to amend Sections 241, 242, and 243 of the Companies Act, allowing the central government to approach the NCLT to declare errant directors as “not fit and proper” for their acts of mismanagement.