New Delhi, Oct 9 (IBNS) Union Minister of Corporate Affairs M. Veerappa Moily on Tuesday said the recent economic reforms announced by the UPA government as sent out a positive signal to the corporate sector.
Addressing media persons gathered at the annual Economic Editors Conference 2012 in New Delhi, Moily said: "We are meeting in a scenario which is growth driven with realistic optimism indicating an ever improving economic situation. The measures recently announced to accelerate the pace of reforms has not only sent a positive signal to the corporate sector but have auger well in the economic as a whole and I am glad that these measures have been whole-heartedly welcomed by different shades of objective opinions."
"That these announced measures are not a passing phenomenon is buttressed by the fact that on a single day i.e. 4th of October the inflow of FII was 0.8 billion US Dollars. What is more the movement of NIFTY in the recent past has been of the order of 25 % which is the highest in the corresponding period among all the major exchanges like NASDAQ (21%) and the German exchange (20%)," he said.
He said the Ministry of Corporate Affairs is tasked with the responsibility of not only regulating and overseeing governance of companies "but indirectly our responsibility also extends to providing a suitable legal framework which allows businesses to play a role in the development by a country with of course involvement and policy inputs from a number of Ministries / agencies".
He said the corporate sector continues to grow at a steady rate.
"At present the number of companies incorporated is nearing a million mark. There is more to this figure - 2.00 lakh companies have been added in the last two years alone. This shows a high degree of corporatisation of businesses in the country and promises ever increasing role of corporates in the overall Indian growth story," said Moily.
Moily referred to the Cabinet approval of a number of amendments to the Companies Bill introduced last year largely on the basis of the report of the Parliamentary Standing Committee on Finance.
"The amendments seek to fine tune the provisions of the Bill to make them more effective and serve the needs of the growth of the corporate sector."
He however, dispelled the impression that one of the amendments makes the requirement to spend 2% of the average net profits of the last three years by the prescribed class of companies from non-mandatory to mandatory.
He clarified that in the Companies Bill, 2011 as introduced, the stipulation is that the select class of companies "shall endeavour to ensure" expenditure as above on the CSR - if they fail to do so, the Director's Report will explain the reasons for not being able to achieve the requisite target.
All that the amendments propose to do is to remove the words 'endeavour to' from the earlier formulation, he said.
"In other words, if a company fails to ensure achievement of the target, it is required to explain the reasons in its report as before and hence there is no material change in the situation as far as its mandatory nature or enforceability is concerned," the minister said.
He hoped that if legislative business proceeds smoothly in the Winter Session, the Bill will receive approval of both the Houses in that Session itself as it reflects the conscientious in the Standing Committee.