CSR -Corporate Social Resposibility- Companies Act 2013-SJCTNC.pptx

Brief notes on CSR as per companies act 2013. Readers can able to get the basic knowledge on CSR

1. Corporate Social Responsibility(CSR) ( SEC- 135 of Companies Act, 2013) A.Albert Ravi, Assistant Professor, Department of Commerce St. Joseph’s College of Arts and Science(Autonomous), Cuddalore-1.

2. CSR Corporate Social Responsibility (CSR) refers to a business practice that involves participating in initiative that gives benefits to the society . . The concept of CSR rests on the ideology of businesses giving back to society as they grow and benefit. Companies take resources in the form of raw materials, human resources etc. from the society. By performing the task of CSR activities, the companies are giving something back to the society . As commonly misunderstood, the CSR is not charity or mere donations. CSR is a way of conducting business, by which corporate entities visibly contribute to the social good . The Term CSR was Coined first In 1953 by American Economist  Howard Bowen   in his Publication named “Social Responsibilities o f the Businessman” He is often referred as the Father of CSR.

3. Highlights of CSR- Companies Act, 2013 Companies Act,2013 On 29 th August 2013, The Companies Act 2013 replaced the Companies Act of 1956 . Sec-135 The New Act has introduced far-reaching changes that affect company formation, administration, and governance, and incorporates an additional section i.e. Section 135 . In India, the Ministry of Corporate Affairs, Government of India notified the Section 135 of the Companies Act, 2013 along with Companies (Corporate Social Responsibility Policy) Rules, 2014 . The mandatory CSR provisions were made effective from 1st April, 2014 for companies with a certain profit , turn-over or valuation . 2013 2014 2014 2013

4. Applicable to CSR in India Every Company in India Its H olding Company Its Subsidiary C ompany Foreign C ompany Rs. 500 Crores or more R s. 1000 Crores or more R s. 5 C rores or more Its Net worth Its Turnover The provisions of CSR applies to : Its Net profit CSR spend amounting to 2 % of their average annual profit over last three years . The companies having the following in the preceding financial year:

5. Importance of CSR CSR improves the public image by publicizing the efforts towards a better society and increasing their chance of becoming favourable in the eyes of consumers. CSR increases media coverage as media visibility throws a positive light on the organisation . CSR enhances the company’s brand value by building a socially strong relationship with customers . CSR helps companies to stand out from the competition when companies are involved in any kind of community. Below reasons reflect why CSR is important:

6. CSR Committee Applicability The CSR Committee should consist of 3 or more directors, out of which at least 1 director must be an independent director. An unlisted public company or a private company shall have its CSR Committee without any independent director if an independent director is not required. In the case of a foreign company, the CSR Committee shall comprise of at least 2 persons of which one person shall be a person resident in India authorized to accept on behalf of the foreign company – the services of notices and other documents. Also, the other person shall be nominated by the foreign company. A private company having only two directors on its Board shall constitute its CSR Committee with two directors . A company having any amount in its Unspent Corporate Social Responsibility Account shall constitute a CSR Committee and comply with the CSR provisions . Every company to which CSR criteria are applicable shall constitute a Corporate Social Responsibility (CSR) Committee .

7. List of Permitted CSR Activities as per Schedule-VII of Companies Act, 2013

8. Non- Permitted CSR Activities (Rule 2(d) of Companies (Corporate Social Responsibility Policy) Rules, 2014) Any activity undertaken by the company outside India except for training of Indian sports personnel representing any State or Union territory at national level or India at international level Contribution of any amount directly or indirectly to any political party under section 182 of the  Act Activities benefitting employees of the company as defined in clause (k) of section 2 of the Code on Wages, 2019 (29 of 2019) Activities are undertaken in pursuance of the normal course of business of the company. Activities supported by the companies on sponsorship basis for deriving marketing benefits for its products or services Activities carried out for fulfillment of any other statutory obligations under any law in force in India

9. Fines and Penalties for Non-Compliance In case a company fails to comply with the provisions relating to CSR spending, transferring and utilising the unspent amount, the company will be punishable with a minimum fine of Rs 50,000 which may increase to Rs 25 lakhs . Further, every officer of such company who defaults in the compliance will be liable for a punishment which is imprisonment for a term which may extend to three years or with a minimum fine of Rs 50,000 which may increase to Rs 5 lakh , or with both.

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