Corporate
Social Responsibility
CSR provisions of Companies Act is applicable on Companies whose
during immediately preceding financial year
Type of Activities covered for Corporate Social Responsibility (CSR)
Corporate Social Responsibility (CSR) is
a concept in which corporates take responsibility to serve humanity, community,
society with a view to do charity on their own volition and with ethically-oriented
practices.
The concept of CSR was first introduced in
section 135 of Companies Act, 2013 and Companies (Corporate Social Responsibility
Policy) Rules, 2014.
Who is Liable to comply with CSR provision?
CSR provisions of Companies Act is applicable on Companies whose
Net Worth >= Rs. 500 Crores or
Turnover >= Rs. 100 Crores or
Net Profit >= Rs. 5 Crores
Composition of CSR Committee
These
companies are required to constitute Corporate Social Responsibility (CSR) Committee
with 3 or more directors. One of them should be Independent Director.
What need to be done
Responsibilities of CSR Committee
a) Formulation and recommendation of CSR
policy to Board
b) CSR Policy shall indicate activities to
be undertaken by the company
c) Recommendation of the amount of
expenditure to be incurred on activities undertaken by the company for CSR activity
and
d) Monitor CSR policy of the company from
time to time
Responsibility of the Board of Directors
of Company
a) Approval of recommendation of CSR
Committee and disclosure of contents of CSR policy in its report as well as
company’s website
b) Board shall ensure that the CSR
activities shall be undertaken by the company.
Composition of CSR Committee is to be
disclosed in the Board’s Report.
Amount
to be Spent on CSR Activities
a) At least, two percent (2%) of average
net profits of the company is required to be spent on CSR activities. Average
net profit shall be calculated on the basis of net profit earned during three
immediately preceding financial years.
b) Where less than 2% is spent, the board
shall give reason in Board’s report for not spending the amount earmarked for
CSR activities.
For spending of CSR amount, preference
should be given to local areas and surrounding areas where it operates.
Schedule VII specifies activities
which may be included by companies in their Corporate Social Responsibility
Policies Activities relating to:—
(i) Eradicating hunger, poverty and
malnutrition, promoting health care including preventinve health care and
sanitation including contribution to the Swach Bharat Kosh set-up by the
Central Government for the promotion of sanitation and making available
safe drinking water.
(ii) promoting education, including
special education and employment enhancing vocation skills especially among
children, women, elderly and the differently abled and livelihood enhancement
projects.
(iii) promoting gender equality,
empowering women, setting up homes and hostels for women and orphans; setting
up old age homes, day care centres and such other facilities for senior
citizens and measures for reducing inequalities faced by socially and
economically backward groups.
(iv) ensuring environmental
sustainability, ecological balance, protection of flora and fauna, animal
welfare, agroforestry, conservation of natural resources and maintaining
quality of soil, air and water including contribution to the Clean Ganga
Fund set-up by the Central Government for rejuvenation of river Ganga.
(v) protection of national heritage,
art and culture including restoration of buildings and sites of historical
importance and works of art; setting up public libraries; promotion and
development of traditional art and handicrafts;
(vi) measures for the benefit of
armed forces veterans, war widows and their dependents;
(vii) training to promote rural
sports, nationally recognised sports, paralympic sports and olympic sports
(viii) contribution to the prime
minister's national relief fund or any other fund set up by the central govt.
for socio economic development and relief and welfare of the schedule caste,
tribes, other backward classes, minorities and women;
(ix) Contribution to incubators funded by Central Government or State
Government or any agency or Public Sector Undertaking of Central Government or
State Government, and contributions to public funded Universities, Indian
Institute of Technology (IITs), National Laboratories and Autonomous Bodies
(established under the auspices of Indian Council of Agricultural Research
(ICAR), Indian Council of Medical Research (ICMR), Council of Scientific and
Industrial Research (CSIR), Department of Atomic Energy (DAE), Defence Research
and Development Organisation (DRDO), Department of Biotechnology (DBT), Department
of Science and Technology (DST), Ministry of Electronics and Information
Technology) engaged in conducting research in science, technology, engineering
and medicine aimed at promoting Sustainable Development Goals (SDGs).
(x) rural development projects
(xi) slum area development
(xii)
disaster management, including relief, rehabilitation and reconstruction
activities.
Whether amount spent for Covid-19 falls under CSR activity spending
As per
clarification issued by Ministry of Corporate Affairs dated 23.03.2020 vide General
Circular No. 10/2020, spending of CSR funds for Covid-19 is eligible CSR
activity. This decision is taken in view of spread of novel corona virus in
India, its declaration as pandemic by WHO, and Govt of India’s decision to treat
this as notified disaster.
DISCLAIMER
The
material and information contained in this blog are for general information
purpose only. Though we have made every efforts to make our
interpretation correctly, we do not make representation either express or
implied about the completeness or correctness of the subject matter.
Under no circumstances the author is not responsible / liable for any loss or
damage caused to anyone due to any mistake / error / omissions.
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