Indian Companies Bill 2013 - Highlights

Indian Government has passed the Indian Companies Bill 2013. I thought of jotting down the highlights and 'what you need to know' so that you don't have to go through all the details just to know what it means to the companies formed in India. Here we go-

1. 2% of the profits every company makes will have to be invested in Corporate Social Responsibility related activities. These are called 'CSR' activities. If the companies fail to comply with the CSR rules, they'll be asked to provide an explanation or will be penalized.

2. 33.33% of the board of directors should be independent to ensure transparency.

3. At least one of the directors of the companies should be a woman.

4. Companies won't be enforced to take social welfare. It can be taken voluntarily.

5. The new bill allows for faster winding up of the companies.

6. The bill allows for setting up of fast track courts to resolve issues faster.

If I've missed out on anything or anything needs correction, please suggest it below. If you have comments on the bill, you're welcome to post them through comments.

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  • Nayan Goenka

    Nayan Goenka

    @nayan-Dhpt4N • Aug 8, 2013

    Kaustubh Katdare1. 2% of the profits every company makes will have to be invested in Corporate Social Responsibility related activities. These are called 'CSR' activities. If the companies fail to comply with the CSR rules, they'll be asked to provide an explanation or will be penalized.



    4. Companies won't be enforced to take social welfare. It can be taken voluntarily.


    dont these two points clash? they say you will no longer be enforced to take on social welfare activities. On the other hand they lay a compulsory 2% donation to CSR. Can you explain this in detail. Seems fishy to me.

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  • Kaustubh Katdare

    Kaustubh Katdare

    @thebigk • Aug 8, 2013

    These are two different activities. Companies are 'required' to donate 2% of the profits. So companies can donate money and not get involved itself in CSR.

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  • Saandeep Sreerambatla

    Saandeep Sreerambatla

    @saandeep-sreerambatla-hWHU1M • Aug 8, 2013

    This is applicable to companies with net worth of some dollars rite? or any startup should do this? sorry if my question is too basic.

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  • Jeffrey Arulraj

    Jeffrey Arulraj

    @jeffrey-xA7lUP • Aug 8, 2013

    Kaustubh Katdare1. 2% of the profits every company makes will have to be invested in Corporate Social Responsibility related activities. These are called 'CSR' activities. If the companies fail to comply with the CSR rules, they'll be asked to provide an explanation or will be penalized.

    4. Companies won't be enforced to take social welfare. It can be taken voluntarily.

    Aren't both a rules a little more contradictory to each other

    So if a firm thinks it is optional to do Social activities Then how will it spend 2% of it's income in the field of social responsibilities work

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  • Kaustubh Katdare

    Kaustubh Katdare

    @thebigk • Aug 8, 2013

    English-ScaredThis is applicable to companies with net worth of some dollars rite? or any startup should do this? sorry if my question is too basic.

    Yes, it is. It does not affect the small / medium business. But rather applies to companies with Rs. 1000 cr+ annual turnover. Check our old thread: <a href="https://www.crazyengineers.com/threads/csr-corporate-social-responsibility-mandatory-for-indian-companies.60681">CSR (Corporate Social Responsibility) Mandatory For Indian Companies</a>

    ConquerorAren't both a rules a little more contradictory to each other

    So if a firm thinks it is optional to do Social activities Then how will it spend 2% of it's income in the field of social responsibilities work


    Explained -

    Kaustubh KatdareThese are two different activities. Companies are 'required' to donate 2% of the profits. So companies can donate money and not get involved itself in CSR.


    The company must 'donate' money to the social cause. But getting involved in social activities itself (adopting a village, conducting programs or events etc.) is optional.

    Consider it as your donation to the local Ganesh festival. You must donate money - but getting involved in all the activities is optional.

    I hope that makes it clearer.

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