NEW DELHI: Companies may now have to inform shareholders about the policies taken by them to tackle the menace of corruption, including bribery. They may also have to inform shareholders of how many complaints they receive, as well as how many they resolve.
The committee, constituted by the Ministry of Corporate Affairs, has given its report on implementing business responsibility norms. In the report, the panel has recommended a framework that would direct a company to disclose specific details on all segments of their businesses, including audits and human resources.
The committee has prescribed specific questions to companies. For instance, a company may have to state whether its policy on ethics, bribery and corruption covered itself alone, or did it extend to a group, joint ventures and suppliers as well. It may also have to state the number of stakeholder complaints received in the past financial year and what percentage of this was satisfactorily resolved by the management.
The new format also asks questions related to the environment and society to ensure India Inc follows best practices in all spheres of business and addresses concern on human rights violations.
While the guidelines were conceptualised by the Ministry of Corporate Affairs, the Securities and Exchange Board of India has also endorsed the idea. Listed companies may be required to give detailed annual reports on these issues to the markets regulator.
According to a ministry official, while the norms would be voluntary, a strict process of reporting has been framed, and this would be periodically reviewed by the ministry and the markets regulator. Rating agencies are also devising an independent mechanism to track the performance of a business.
“Companies will have to give an annual business responsibility report. Though it would initially be voluntary, companies may have to explain the reason for choosing not to submit the report,” said a ministry official.
This would, in a way, ensure companies diligently follow business responsibility norms aimed to encourage ethical practices in all segments of operations, not merely spend on social causes. The committee was mandated to form a reporting framework for companies, aimed at enabling the implementation of the national voluntary guidelines on social, economic and environmental responsibilities,. These guidelines were introduced by the Ministry of Corporate Affairs last year.