The Economic Times
New Delhi

NEW DELHI: The government has rejected industry's demand for relaxation of a condition under the new companies law that makes it mandatory for them to disclose details of money given to political parties.

Companies felt this would make them vulnerable to a backlash from parties that didn't get money or were given less than rivals. "It is a fair concern. But corporate affairs ministry cannot amend the law passed by Parliament," said a senior official. The ministry is in the process of finalising the rules that will govern the new Companies Act.

The Confederation of Indian Industry (CII) had written to the government urging it to change Section 182 (3) of the new Act that says corporate houses must disclose names of parties they fund in their profit and loss account.

The earlier Act allowed companies to name persons they were donating funds to without mentioning any party. CII said it hadn't received a formal reply from the ministry. The industry grouping believes there is a contradiction between the rules governing funding of political parties directly and through trusts.

The 1956 Act that governs electoral trusts does not require disclosure of party names, CII said.

Industry's argument is that there's a misalignment between the two sets of rules. Therefore, rules for the new Act should clarify this clause. Some business houses route all their payments to parties through trusts.

While the ministry agrees that the concerns of industry are valid in terms of a misalignment between the companies law and the rules on disclosure of political funding through trusts, it believes the onus is on thefinance ministry to bring the latter in conformity with the legislation. "Ministry of finance must clarify in its scheme on changes that could be made to align it with the new Companies Act," said the official. Large chunks of money raised by the six national parties between 2005 and 2012 came from "unknown" sources, according to a analysis by the Association of Democratic Reforms, an advocacy group on electoral reforms.

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