CS Tripti Shakya
An organization cannot survive in isolation, it’s functioning has directly or indirectly bearing on society and environment. Hence, it becomes the obligation of an organization to look after the society in which they are growing that is why the concept of Corporate Social Responsibility (CSR) came into picture. Several countries like Sweden, Norway, Denmark and other countries have already laws governing Corporate Social Responsibility (CSR).
However, India is the first country to mandate the provisions of Corporate Social Responsibility (CSR) and this landmark legislation is governed under 135 of The Companies Act, 2013, read with The Companies (Amendment) Act, 2017 and the Companies (Corporate Social Responsibility Policy) Rules, 2014.
Basic Concepts of provisions of Corporate Social Responsibility’s (CSR) are as follows:-
As per sub-section (1) of section 135, the Corporate Social Responsibility (CSR) is applicable on every company whether Public or Private if, in the immediate preceding Financial Year, company falls into any of three below given criteria :-
COMPOSITION OF COMMITTEE:
A Corporate Social Responsibility Committee of consist of three or more directors, out of which at least one director shall be an independent director in case of Public Company and Two or more members in case of Private Company.
We can sum up this as:-
RESPONSIBILITIES OF COMMITTEE:
The Committee shall be responsible for:-
a) formulation and recommendation to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company [in areas or subject, specified in Schedule VII];
b) Recommending the amount of expenditure to be incurred on the activities of CSR; and
c) Monitoring of the Corporate Social Responsibility Policy of the company from time to time.
Note:- Activities on which policy and expenditure is to be made only in respect of activities made under Schedule VII of The Companies Act, 2013 read with amendments thereto made from time to time.
CORPORATE SOCIAL RESPONSIBILITY EXPENDITURE:
The Board of Directors of every company on which provisions of Corporate Social Responsibility (CSR) is applicable and Average net profit of three (3) immediate preceding financial years is profit then it shall spend atleast two (2) percent of average net profit of the three immediate preceding financial Years and also disclose the same in Board Report.
However, the details about the policy developed and implemented by the company on corporate social responsibility initiatives taken during the year in the Board Report.
The company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.
(Author CS Tripti Shakya can be reached at firstname.lastname@example.org)