More transparency in corporate donations to parties needed
Corporate Affairs Minister Salman Khurshid on Wednesday advocated greater transparency in corporate donations to political parties saying it is important for shareholders to know how the money is being spent and for what purpose.
The Corporate Affairs Ministry, Khurshid said, has already suggested incorporation of norms for disclosure of donations to political parties in draft Companies Bill which is before the Parliamentary Standing Committee on Finance.
"There should be more transparency in the way corporates fund political parties," he said while speaking at a conference on public governance hosted by All India Management Association (AIMA) in New Delhi.
Under the existing law, companies can donate up to 5 per cent of its profit in a year, and are mandated to disclose the amount in its profit and loss account. This should be done exercise with the approval of its board of directors through a resolution.
"I think when we are looking at greater corporate governance and shareholder democracy, this area itself is a very important issue. Who you are giving money to, what purposes you are giving money for, how much is permissible under the law, how much is to be disclosed, these are very important issues which I hope will reflect in the new Companies Bill as well," Khurshid told reporters after the conference.
Speaking further he said that in case the provisions are not included in the new Companies Bill, the Ministry would work out voluntary guidelines for corporate donations to political parties.
"First we have to see at the final bill (companies bill) and after that we will certainly keep this in mind while framing voluntary guidelines," he said.
The Companies Bill 2009, which is expected to be passed by Parliament in this session, promises greater shareholders democracy and fixes more responsibility on independent directors. The Bill is likely to be enacted by the end of this year, Khurshid had said earlier.