CS Nisha Sharma
CSR is the process by which an organization
thinks about and evolves its relationships with stakeholders for the common
good, and demonstrates its commitment in this regard by adoption of appropriate business
processes and strategies. Thus CSR is not charity or mere donations CSR is
a way of conducting business, by which corporate entities visibly contribute to
the social good.
With CSR to be a compulsory compliance for a prescribed set of
companies, India has become the first country in the whole world to make it
mandatory for the corporate. CSR should not be taken as an obligation but a social
responsibility which should be
fulfilled strategically, systematically and thoughtfully.
Let’s discuss some of
the provisions of CSR:
As per section 135 and
the Companies (Corporate Social Responsibility) Rules, 2014 of Companies Act,
2013:
1.
Applicable to all companies incorporated in India and having :
o
Net profit of INR 5 Crore or more
o
Turnover of INR 1000 Crore or more
o
Net worth of INR 500 Crore or more
During any financial year require to constitute CSR committee.
*My view: According to me the limit of “5 Crore or more” is very less
because even a small scale company is able to make such a profit and for a company making a few numbers more than 5 crores say
6.5 crore and an average of let’s say 6 crore for the previous 3 financial
years, it is hard to spend 2% on CSR activities. Spending 12 lacs in CSR
activities in just an year is just like throbbing someone’s head with a hammer
and it seems so compulsory to throb that hammer.
Infact this is the reason the owners of Private Companies are
looking at this NCA as a challenge to their business. Increased number of compliances has
increased the lines of their foreheads and I am afraid that could lead to
increased professionals who will serch for loopholes than the professionals
actually complying with the law with true letter and spirit.
At times we adopt a
different roadmap to attain a given goal and I am afraid that the different
roadmap would be not revealing the true numbers in the balance sheet just to
save the company from getting hit from the hammer of NCA.
On the other hand provisions like CSR are likely to teach the
SMEs to be more law compliant and to learn the laws quickly which were
previously been skipped from them as they had relaxations and moreover ways to
find loopholes. I am quite satisfied with the new NCA in this context.
CSR spending = 2% of the average Net Profits made by the company during every block of three years
Net Profit’ for the section 135 and these rules shall mean
net profit before tax as per books of accounts and shall not include profits
arising from branches outside India.
2. Steps to be followed:
Step1. Formation of
CSR Committee comprising two directors (in case of Private Company)
Committee shall:
a. Formulate and recommend to the Board, a Corporate Social
Responsibility Policy which shall indicate the activities to be undertaken by
the company as specified in Schedule VII; (Schedule VII is mentioned below)
b. Recommend the amount of expenditure to be incurred on the
activities referred to in clause (a); and
c. Monitor the
Corporate Social Responsibility Policy of the company from time to time.
Step2. Approval of the
CSR committee and the policy made at the board meeting.
1.
Activities as per Schedule VII which may be included by companies in their
Corporate Social Responsibility Policies:—
(i) Eradicating hunger, poverty and malnutrition, promoting
preventive health care and sanitation and making available safe drinking water
including contribution towards “Swacch Bharat Kosh” set up by the central government for the
promotion of sanitation.
(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, day care 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 quality of soil, air and water including
contribution to the “Clean Ganga Fund” set up by Central Government for rejuvenation
of river Ganga;
(v) protection of
national heritage, alt 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 P me 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 Caste & 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 Movement
(x) Rural
development projects.”, minorities and women; and
(xi) Slum Area Development and such other activities as may be
prescribed by the Ministry from time to time.
4. How to contribute
a. The Board of a
company may decide to undertake its CSR activities approved by the CSR
committee, through
o
a registered trust or
o
a registered society or
o
a company established under section 8 of the Act by the company or its holding or
subsidiary or associate company or otherwise;
o
May collaborate with other companies for undertaking projects or programs or CSR
activities in such a manner that the CSR committees of respective companies are
in a position to report separately on such projects or programs in accordance
with these rules.
5. What would not be CSR
a. CSR programs
not undertaken in India.
b. Activities that
would benefit employees only
c. Contribution of any
amount directly or indirectly to any political party.
d. Expenditure in the normal course of business.
Thus, although on a
social note CSR is a good initiative but to me the threshold limit of 5 crore
or more was quite surprising but if the intention was to bring SMEs into the
threshold limit and making them follow the new rule than hats off to the NCA.
Nevertheless the corporate have welcomed CSR with open hearts and the term
corporate sustainability has really been given emphasis just spending for the
sake of philanthropy and social cause.
Finance minister Arun
Jaitley on Tuesday said companies are expected to pump in as much as Rs 14,000
crore for Corporate Social Responsibility (CSR) activities in 2014-15 and the
amount will be increasing in subsequent years.
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