`More transparency in corporate funds to parties`

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 spend and for what purpose.

Updated: Aug 11, 2010, 17:19 PM IST

New Delhi: 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 spend 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) here.

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
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 fix more responsibility on independent
directors. The Bill is likely to be enacted by the end of this
year, Khurshid had said earlier.

PTI