By Arvind
A Deshpande
Trusteeship as perceived by
Gandhi is a all embracing. It is an attitude first, then a technique and finally
a constitutional form. It tells us that to the extent that we command scarce
resources, we are answerable to others. All human rights convey corresponding
duties. Thus the Gandhian concept of trusteeship expresses the inherent
responsibility of business enterprise to its workers, shareholders, consumers
and the community and the mutual responsibilities of each to the other. This is
the price of democracy. Without virtue in the individual and in the organs of
society, democracy cannot survive.
At an international seminar on
Trusteeship which took place in Bangalore from October 26 to 29, 1979 the one
conclusion that was arrived at was that business and industry includes such a
variety of firms and companies with members ranging from a handful to many
thousands and that any one model of a responsible enterprise cannot serve for
all. There must be a multiplicity of models and the best will emerge through
experience. Hence the importance of making a start.
One way was shown by Ernest
Bader of Scott Bader Commonwealth who gave his company freely to his employees
but retained a life pension and life chairmanship.
Spedan
Lawis gave his much larger company to this employees in return for a payment of
$ one million over a period of time.
Ernest Abbe Zeiss gave to his
employees freely but at the same time made sure that a deed of trust would
protect the interest of consumers and community alike. All surplus profits went
permanently to the University and town of Gena in which the Zeiss Foundation was
situated. Then take an individual proprietor of a business who ventures his
saving in order to create something new. He is also a social benefactor
and one to be respected. Now suppose a generation has passed. The proprietor has
no heir and has to settle his business. What can he do? Trusteeship tells him
that he may execute a deed of trust in favour of his employees and give his
shares free of for a payment to be made to his family over a period of time.
What about a medium sized
company jointly owned. Here the capital formation is critical. If there is
equity capital it should over time, say 50 years, be repaid. Alternatively, the
shares can be put up on the open market and put into trust for the employees or
converted into fixed interest preference shares. There is no warrant in the
moral law for permanent debts and all debts must in time be cancelable or
repayable in any society that pretends to respect freedom. This gives the
director a way of creating a trusteeship company via share ownership.
Another way is by a declaration
of Corporate purpose that can be overseen by an independent group of social
auditors.
Trusteeship becomes essential
rather than desirable when we come to larger companies including nationalised
industries and multinational corporations. Here the declaration of Corporate
purpose and social audit can serve the purpose. Social responsibility is the
beginning of Trusteeship. It can be expressed in many ways including sharing
power and profits and management functions. It can be expressed in the existence
of social purpose and objectives in companies' articles and management's role
becomes that of balancing all claims including those of community and the
consumers. If the company has no soul, it had better develop one.
Then there is the experience of
several British and Spanish common ownership firms. Common ownership is
different from co-operative societies, because here capital is sought on a loan
basis and there is no equity capital.
An enlightened industrialist
can, in the Indian conditions, float a private limited company by contributing
the seed capital and the balance will come from a public financial institution
like a bank. All the other directors will function as trustees and represent
different interests like those of the community and the consumers without having
any financial stake. The profits after payment of tax will be distributed as
follows:
25% to pay back to the bank;
25% to build reserves for the future; 25% to be distributed equally among the
workers and 25% to be given back to the community for rural development and
other such causes.
The other alternative is to
start a common ownership enterprise under Section 25 of the Indian Companies
Act. The company will be registered with limited liability under Section 25 and
as a public company. Such a company may be further registered both under the
Public Trust Act as well as under Section 12 A of the Income Tax Act and can
seek exemption under Section 10 (23) C (IV). It can secure exemption also under
Section 80G for contribution to the seed capital and also under Section 35 CCA
it it is established in a rural area.
In the context of our
situation, acceptance of social obligations not only means acceptance of normal
business obligations but a commitment to national and community goals which
include participation in the wider fields of rural development creating
entrepreneurship and self-employment.
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