Every Indian Company Mandated To Have A Physical Address; Govt. Needs Details About CSR Money Spent
Finance minister Nirmala Sitharaman has announced some new rules that have tightened the noose around companies. The intention behind his was “declogging the National Company Law Tribunal”, and strengthen the provisions of enforcement, as tweeted by the newly elected Finance Minister of India.
A number of new rules have been introduced, which seem to have made the atmosphere a bit tense. The Parliament has also gone ahead and cleared the rules after the Rajya Sabha passed the bill by voice vote.
What are the new rules that the companies have to follow? Read on and find out!
The Companies (Amendment) Bill, 2019
The Finance Minister, Nirmala Sitharaman has revealed that the section 135 of the Act was undergoing changes that will give out penal provision if there is non-compliance of CSR provisions.
Even before you start the function, it is necessary for the company to declare before commencement of business: Smt @nsitharaman— NSitharamanOffice (@nsitharamanoffc) July 30, 2019
Taking a jibe at the UPA, she wondered if the older act was not given much thought, and was passed in a hurry. She announced that the new act is undergoing a number of major changes.
Sitharaman said, “It was easy for people to interpret that either we comply or we give an explanation and get away with it. Now that is not happening because Section 135 (of the Companies Act) is being amended to provide specific penal provision in case of non-compliance.”
Companies will now have to explain where they have spent the CSR money. We are giving a three years window after which they will have to move the CSR money in an escrow account if they don’t spend it: Smt @nsitharaman— NSitharamanOffice (@nsitharamanoffc) July 30, 2019
She also tweeted that the new and changed bill will be excluding routine matters out of the National Company Law Tribunal, and thus clearing its route.
New Rules Introduced by the Finance Minister
As we all know, every company has mandated corporate social responsibility norms. As per the changed rules, every company is now entitled to explain the expenditure of the CSR money. If it is unspent for the three year window provided by the Government, the companies will have to move the money in an escrow account.
Now it has become mandatory that companies do have a physical address. Physical register is to be maintained so that people can go and check them and there is a veracity of their claims: Smt @nsitharaman— NSitharamanOffice (@nsitharamanoffc) July 30, 2019
Another rule that the Government has employed is that even before the start of the function, it will be compulsory for the company to declare. Also, it is compulsory for companies to have a physical address. There will be a physical register in place so that people can verify them and if there is a “veracity of their claims.”
A member also expressed his worry over the issue of small companies being unable to appoint company secretaries. To which the finance minister responded that the Government is working on loosening the strings a bit. The Government is also holding consultations with all the stakeholders to reach a solution.