Corporate Social Responsibility Under Companies Act, 2013

Definition of?Corporate Social Responsibility (CSR)

The term Corporate Social Responsibility or CSR has been defined as under, but is not limited to:

• Projects or programs with reference to activities that are specified in the Schedule; or
• Projects or programs related to activities undertaken by the Board in pursuance of recommendations of the CSR Committee according to the declared CSR policy subject to the condition that such policy covers subjects explained in the Schedule.

Applicability:

The provision of CSR applies to:

• Every Company
• Holding Company
• Subsidiary Company
• Foreign Company

Having in the preceding financial year:

• Net Worth >500 crore, or
• Turnover >1000 crore, or
• Net Profit >5 crore

Activities permitted under Corporate Social Responsibility (CSR)

The following activities can be performed by a?company to accomplish its CSR obligations:

• Eradicating extreme hunger and poverty
• Promotion of education
• Promoting gender equality and empowering women
• Reducing child mortality
• Improving maternal health
• Combating human immunodeficiency virus, acquired, immune deficiency syndrome, malaria and other diseases
• Ensuring environmental sustainability,
• Employment enhancing vocational skills, social business projects
• Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development, and
• Relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women and such other matters as may be prescribed.

The Board’s Report shall disclose:

• CSR Committee’s composition
• The contents of CSR Policy
• In case CSR spending does not meet 2% as per CSR Policy, the reasons for the unspent amount, and details of the transfer of unspent amount relating to an ongoing project to a specified fund (transfer within a period of six months from the expiry of the financial year).

Fines and Penalties for Non-Compliance

In case a company fails to comply with the provisions relating to CSR spending, transferring and utilizing the unspent amount, the company will be punishable with a minimum fine of Rs 50,000 which may increase to Rs 25 lakh. 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.