Corporate Social Responsibility

Corporate Social Responsibility (CSR) under the Companies Act, 2013

India`s new Companies Act 2013  has introduced several new provisions for Corporate Social Responsibility (CSR). Section 135 deals with CSR.

Section 135(1) Every company having a net worth of rupees five hundred crores or more, or turnover of rupees one thousand crores or more or a net profit of rupees five crores or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.

Section 135(5) states that The Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two percent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy:

Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount.

Ministry of Corporate Affairs has further clarified/specified the Projects or programs relating to activities in pursuance of recommendations of the CSR Committee of the Board as per declared CSR policy of the company like:

(i)             Eradicating hunger, poverty, and malnutrition, promoting preventive health care and 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, daycare centers 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 the quality of soil, air, and water;

(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 arts and handicrafts;

(vi)          Measures for the benefit of armed forces veterans, war widows, and their dependents;

(vii)         Training to promote rural sports, nationally recognized 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 Government for socio-economic development and relief and welfare of the scheduled castes, the Scheduled Tribes, other backward classes, minorities, and women;

(ix)          Contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government;

(x)            Rural development projects.

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