Around 15,000 companies which have CSR obligation of Rs 50 lakh or less will be exempt from the requirement of setting up CSR panels. Around 20,000 companies have to meet CSR obligations every year and the annual CSR spend is estimated at Rs 15,000 crore.
India’s capital-starved start-ups, unicorns and small firms will now have greater access to overseas capital, with the Cabinet approving a proposal for direct listing of Indian companies abroad. Besides this, seen as another step towards fuller capital account convertibility, the Cabinet also cleared 72 amendments to the Companies Act, covering as many as 65 sections to decriminalise various offences and facilitate the ease of doing business.
Firms that have a spending obligation of less than Rs 50 lakh under CSR would no longer have to constitute CSR committees. “We will recategorise 23 offences out of 66 compoundable offences. And these 23 offences will be dealt under an in-house adjudicating framework. We are also doing away with 7 compoundable offences and limiting 11 compoundable offences to just penalty (by removing imprisonment). Also, five offences would be dealt with under an alternative framework,” finance minister Nirmala Sitharaman said after the Cabinet meeting.
Around 15,000 companies which have CSR obligation of Rs 50 lakh or less will be exempt from the requirement of setting up CSR panels. Around 20,000 companies have to meet CSR obligations every year and the annual CSR spend is estimated at Rs 15,000 crore. The top 5,000 firms account for almost 80% of the total CSR spend.
Sitharaman said with respect to CSR spending, if a firm has an obligation of spending more than the mandated 2% spend in a year, then such firm would be allowed to carry it forward for the next 2 or 3 years.
The Cabinet also approved the provision for allowing payment of adequate remuneration to non-executive directors in case of inadequacy of profits by aligning with provisions for remuneration to executive directors. This means that a debt-ridden company which has not been posting profits would be able to retain talented independent directors and non-executive directors to help it come out of the rut.
The amendments to Companies Act also allows for proposing more benches of the National Company Law Appellate Tribunal (NCLAT) and removing restrictions on maximum members in NCLAT in view of the increasing workload of the appellate tribunal. The amendments approved are largely based on recommendations of the Companies Law Committee, which was set up in September last year.
Currently, to access overseas investments, Indian investors have either get companies registered in foreign countries and then get listed on foreign stock exchanges or use the depository receipts route. While this is relatively easier for large India business houses, start-ups and small firms find this route difficult.