174x Filetype PPTX File size 1.10 MB Source: dpe.gov.in
Corporate Social Responsibility (CSR) Legislation • For the first time, anywhere in the world, CSR for companies, including CPSEs has been mandated through legislation in India • Section 135 of the Companies Act, 2013 contains CSR provisions • Schedule VII of the Act enumerates activities that can be undertaken by CPSEs as CSR • Section 135, amended Schedule VII of the Act, and the Companies (Corporate Social Responsibility Policy) Rules, 2014 were notified by M/o Ministry of th Corporate Affairs on 27 Feb 2014 • All came into force from 01.04.2014. This is the first year of implementation of CSR by CPSEs under the Act • 2014-15 was the first year of implementation of CSR by Companies under the Act 2 Highlights of Statutory Provisions • Under Section 135 of the Act, companies, including CPSEs crossing thresholds, i.e., • Net Worth of INR 500 crore or more; OR • Turnover of INR 1000 crore or more; OR • Net Profit of INR 5 crore or more, are required to discharge the obligations of CSR. • At least 2% of the average net profits of the company made during 3 immediately preceding financial years are to be spent on CSR activities every year. • ‘Net profit’ for computation of CSR spends is to be computed as per Section 198 of the Act and is ‘Profit Before Tax’ (PBT). • Such companies have to constitute a CSR committee of the Board, comprising of three Directors or more with at least one Independent Director. • The CSR projects or programs or activities undertaken in India only shall amount to CSR 3 Expenditure, though companies shall give preference to the local area and areas around its operations. Responsibilities of the CSR Committee & Company’s Board Responsibilities of the CSR Committee : • To formulate and recommend a CSR policy which shall indicate activities as specified in Schedule VII of the Act. • To recommend amount of expenditure to be incurred on CSR activities • To monitor the CSR policy of the company from time to time. Responsibilities of the Company’s Board : • Approve and disclose CSR Policy in the Annual Report and on the company website • Ensure implementation of CSR activities as per the Policy • Directors’ Report to specify reasons in case the specified amount is not spent 4 Activities covered in Schedule VII of the Act •Eradicating hunger, poverty, malnutrition, promoting healthcare including contributions to “Swach Bharat Kosh” •Promoting education and employment enhancing vocational skills; • Promoting gender equality, empowering women; •Ensuring environmental sustainability including contribution to “Clean Ganga Fund”; •Protection of national heritage, art and culture; •Measures for the benefit of armed forces, war widows and their dependents; •Promotion of sports; •Contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government; •Contribution to technology incubators; •Rural development projects; 5 •Slum-area development; Activities outside the Purview of CSR • The CSR projects or programs or activities that benefit only the employees of the company and their families • One-off events such as marathons/ awards/ charitable contribution/ advertisement/sponsorships of TV programmes etc. • Expenses incurred by companies for the fulfillment of any Act/ Statute of regulations (such as Labour Laws, Land Acquisition Act etc.) • Contribution of any amount directly or indirectly to any political party • Activities undertaken by the company in pursuance of its normal course of business. • Contributions flowing out of budgetary resources, profits or from the balance sheets of CPSEs to PMNRF. 6
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