" Be the change that you wish to see in the world "
- Mahatma Gandhi
Corporate Social Responsibility (CSR) is a concept whereby organisations take responsibility for their impact on society and the environment. The goal of CSR is encourage a positive impact on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere.
Though there are tons of advantages of adopting CSR, more than everything, its an ethical payback to the society and the planet, we live in.
Subsection (1) of Section 135 of the Companies Bill 2012 defines the companies for whom formation of a Corporate Social Responsibility Committee of the Board is mandatory.
PSA with their mobile workshops and customized skill courses, help the Corporates to discharge their CSR through skill development in their neighborhood as well as imparting essential skills required by such Corporates to employ them in their factories/facilities.
CSR MANDATE
- "Companies Bill 2012 mandates CSR by Sections 134, 135, Schedule III and Schedule VII of the Companies Bill 2012. The sections 134 and 135 are part of Chapter IX on Accounts of Companies."
- "Mandatory Reporting- the Section 134, under subsection 3, clause (o) states that there shall be attached to (Financial) statements laid before a company in general meeting, a report by its Board of Directors, which shall include the details about the policy developed and implemented by the company on corporate social responsibility initiatives taken during the year."
- Subsection (1) of Section 135 of the Companies Bill 2012 defines the companies for whom formation of a Corporate Social Responsibility Committee of the Board is mandatory.
- As per the same, every company having net worth of INR 500 crore (INR 5 billion) or more, or turnover of INR 1,000 crore (INR 10 billion) or more or a net profit of INR 5 crore (INR 50 million) or more during any financial year.
Answer: Applicable to companies with:
- ✔ Net worth of Rs. 500 crore or more or
- ✔ Having a turnover of Rs 1,000 crore or more or
- ✔ Having a net profit of Rs 5 crore or more during any financial year.
Answer: Companies qualifying as above are required to form a CSR Committee with at least one independent director. The CSR spend of a company which meets the aforementioned threshold is required to be 2% of the average net profits for the preceding three financial years.
Answer: Yes, the concept of independent directors gets extended even to private limited companies if they meet the requisite financial thresholds.
A. Formulate and recommend a ‘CSR Policy’ to the Board which indicate the activities to be undertaken by the company; Recommend the amount of expenditure to be incurred in relation to the CSR policy; and Monitor the progress of the CSR policy from time to time. The CSR policy is required to be disclosed on the company’s website.
A.CSR activities recognised under the Bill include:
- ✔ Eradicating extreme hunger and poverty
- ✔ Promotion of education
- ✔ Promoting gender equality and empowering women
- ✔ Reducing child mortality and improving maternal health
- ✔ Combating HIV, AIDS, Malaria and other diseases
- ✔ Ensuring environmental sustainability
- ✔ Imparting employment enhancing vocational skills
- ✔ Social business projects
- ✔ Contribution to certain funds The company is to give preference to local areas when formulating its CSR policy.
Answer: Yes, the Bill provides for rules to be prescribed in relation to CSR provisions. The rules are currently in the process of being drafted.
Answer: The draft CSR Rules presently require a company to report their CSR spend in a form provided therein and it is likely that such reporting requirements will be included in the final rules as well.
Answer: The Bill only provides that sufficient reasons need to be provided for not making the requisite CSR spend. While no specific penalties are contemplated in the Bill with respect to CSR, Chapter XXIX of the Bill (Sections 450 and 451) provide for general penalties for contravention and repeat offences.