Making CSR work On Companies Act amendments.

GS-III: Making CSR work On Companies Act amendments

Context

Amendments to the relevant sections of the Companies Act in the last session of Parliament have now made non-compliance with CSR norms a jailable offence for key officers of the company, apart from hefty fines up to 25 lakh on the company and 5 lakh on the officer in default.

Corporate Social Responsibility (CSR):

Corporate Social Responsibility is defined as the voluntary integration of a company’s social and ecological concerns into its business activities and its relationships with its stakeholders. Being socially responsible means not only fully satisfying the applicable legal obligations but also going beyond and investing ‘more’ in human capital, the environment, and stakeholder relations.

The Companies (Amendment) Bill, 2019 and CSR:

The Companies (Amendment) Bill, 2019 which amends the Companies Act, 2013 was passed in monsoon session have made non-compliance with CSR norms a jailable offence.
Under the Act, if companies which have to provide for CSR, do not fully spend the funds, they must disclose the reasons for non-spending in their annual report. However, under the Bill, any unspent annual CSR funds must be transferred to one of the funds under Schedule 7 of the Act (e.g., PM Relief Fund) within six months of the financial year.

High-level committee

Recommenations of CSR:

Making CSR expenditure tax deductible
Provision for carry forward of unspent balance for a period of 3 – 5 years
Aigning Schedule 7 with the SDGs by adopting a SDG plus framework (which would additionally include sports promotion, Senior Citizens’ welfare, welfare of differently abled persons, disaster management and heritage protection
Balancing local area preferences with national priorities
The Committee has emphasized on not treating CSR as a means of resource gap funding for government schemes.
The Committee discourages passive contribution of CSR into different funds included in Schedule VII of the Act.
It has emphasized on CSR spending as a board-driven process to provide innovative technology-based solutions for social problems.

Conclusion

CSR is not the main business of a company they should rightly be focusing their energies on the business rather than on social spending.

Source: Indian Express

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