Sachin Pilot, minister of corporate affairs, has assured that he is open to receiving suggestions from industry on defining the thresholds for applicability of various provisions of the Companies Act.
Pilot, who was interacting with senior industry leaders in the national capital on Friday, said that corporate social responsibility (CSR) has attracted much more attention than any other aspect of the new Act but the success of this would depend on how it is taken by the corporate houses.
Though the interaction covered a wide range of subjects such as the requirement of independent directors for unlisted companies, audit rotation, definition of share capital, etc but the major emphasis was on implementation of CSR provisions.
Rahul Bajaj, chairman of Bajaj Industries, said that the government should not form rules for implementing the CSR. He said, “Make only recommendatory guidelines and not binding rules.
Let us implement it (CSR) on our own and then the government can review it after three years.”
Further, he disagreed that charity and philanthropy are not CSR, as mentioned in the Act.
Adi Godrej, chairman of Godrej group said that that rules should be liberal initially and can be amended later. He emphasized that “the ease of doing business should not be affected” with the binding rules.
Pilot made it clear that it is not the work of the government to restrict companies on how to spend on CSR.
“The only requirement is that the board of the company must give its approval to it and it must be displayed on the company's website so that there is transparency. The ministry is even trying to create a template based on which the companies can display the CSR spending on their website - which is easily understandable to everyone,” the minister said.

He emphasised that religious contributions or donations cannot be considered as part of CSR. "But if it gets approval from the board and is fully disclosed to the shareholders then they can spend wherever they want to," he said.

Based on the three criteria mentioned under the Act, 15,000 companies out of 8 lakh operational in the country are expected to qualify for CSR spending.
Pilot said that if there is 100 percent compliance of the CSR, then there could be around Rs 18,000 to 20,000 crore spent every year by the private sector.

"CSR being mandated is not done to force companies to spend with grudges. But it is for the overall social development of the country," he said.

Pilot, who was clarifying all the doubts coming from the industry leaders, said that the Act is forward-looking and nothing in the Act would take effect retrospectively.