Corporate Compliance

Fee Structure

Consultation Per Hour
Total : 10000/- INR


CSR Compliance and Advisory

 Compliance relates to the compulsory legal obligation which an undertaking must meet for smooth functioning of business, to avoid unnecessary legal procedures. Compliance cannot be discussed without including the CSR compliances. The corporate social responsibility of an undertaking. CSR is a self-regulating model making businesses socially accountable for their acts. India became the first country to mandate spending on CSR activities through a statutory provision that came into effect from the financial year 2014-2015.

As per Section 135 of the Companies Act 2013, every company with a specified net worth or turnover or net profit is required to mandatorily spend 2 percent of its average net profit towards specified CSR activities. Though many corporate houses in India have been doing CSR activities voluntarily, the new CSR provisions put formal and greater responsibility on companies to set out a clear framework and process to ensure strict compliance.

 

What Is Corporate Social Responsibility (CSR)?

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable—to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.

To engage in CSR means that, in the ordinary course of business, a company is operating in ways that enhance society and the environment, instead of contributing negatively to them. The key idea behind CSR is for corporations to pursue other pro-social objectives, in addition to maximizing profits. Examples of common CSR objectives include minimizing environmental externalities, promoting volunteerism among company employees, and donating to charity.

Understanding Corporate Social Responsibility (CSR)

Corporate social responsibility is a broad concept that can take many forms depending on the company and industry. Through CSR programs, philanthropy, and volunteer efforts, businesses can benefit society while boosting their brands.

As important as CSR is for the community, it is equally valuable for a company. CSR activities can help forge a stronger bond between employees and corporations, boost morale and help both employees and employers feel more connected with the world around them.

 

CSR Includes

List of Permitted Activities To Be Included in Accordance With Schedule VII of the Companies Act, 2013

The Board shall ensure that the activities included by a company in its CSR Policy fall within the purview of the activities included in Schedule VII. Some activities are specified in Schedule VII as the activities which may be included by companies in their Corporate Social Responsibility Policies. These activities are related to:

Sr.No

CSR Activities

1

abolishing poverty, malnourishment and hunger, improvising health care which includes preventive health care and sanitation, and making available safe drinking water.

2

improvement in education which includes special education and employment strengthening vocation skills among children, women, elderly, and the differently-abled and livelihood enhancement projects.

3

Improving gender equality, setting up homes and hostels for women and orphans.

4

Introducing the measures for reducing inequalities faced by socially and economically backward groups.

5

Safeguarding environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources, and maintaining a quality of soil, air, and water which also includes a contribution for rejuvenation of river Ganga.

6

Protection of national heritage, art, 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.

7

Areas for the advantage of skilled armed forces, war widows and their dependents.

8

Training to stimulate rural sports, nationally recognized sports, Paralympic sports, and Olympic sports.

9

Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development providing relief and welfare of the Scheduled Castes, the Scheduled and backward classes, minorities and women.

10

Contributions or funds provided to technology incubators are approved by the Central Government.

11

Rural development projects.

12

Disaster management, including relief, rehabilitation, and reconstruction activities.

13

Slum area development where ‘slum area’ shall mean any area declared as such by the Central Government or any State Government or any other competent authority under any law for the time being in force.

 

 Applicability 

The provisions of CSR applies to:

  • Every company
  • Its holding company
  • It's subsidiary company
  • Foreign company

It applies to every Company, its holding, subsidiary or Foreign company having in the preceding financial year

Net worth > 500 crore

Turnover > 1000 crore

Net profit > 5 crore 

 

Compliances under CSR

The Board of Directors of the companies are responsible to ensure that the company spends the mandatory CSR spend on specified CSR activities in accordance with the CSR policy of the company and disclose the CSR policy and CSR activities of the company as specified in the provisions.

Each qualifying company should form a CSR committee that will formulate the CSR policy of the company and effectively monitor the CSR activities of the company.

The Ministry of Corporate Affairs (MCA) has issued draft rules on CSR for public discussion. The said draft CSR rules lay down the framework and guidance on the manner in which every eligible company is expected to undertake CSR initiatives

 

Importance of Corporate Social Responsibility

CSR is an immense term that is used to explain the efforts of a company in order to improve society in any other way.

  • CSR improves the public image by publicizing the efforts towards a better society and increasing their chance of becoming favorable in the eyes of consumers.
  • CSR increases media coverage as media visibility throws a positive light on the organization.
  • 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.

 

Role of Board of Directors

The role of the Board of Directors is as follows:

  • After considering the recommendations made by the CSR Committee, approve the CSR policy for the Company.
  • The Board must ensure only those activities must be undertaken which are mentioned in the policy.
  • The Board of Directors shall make sure that the company spends in every financial year, minimum of 2% of the average net profits made during the 3 immediately preceding financial years as per CSR policy.
  • In case a company has not completed 3 financial years since its incorporation, the average net profits shall be calculated for the financial years since its incorporation.
  • 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).

 

Transfer and Use of Unspent Amount

The specified funds for transfer of unspent amount are:

  • A contribution made to the prime minister’s national relief fund.
  • Any other fund is initiated by the central government concerning socio-economic development, relief, and welfare of the scheduled caste, minorities, tribes, women, and other backward classes.
  • A contribution made to an incubator is funded either by the central government, the state government, public sector undertaking of state or central government, or any other agency.

Contributions made to:

  • public-funded universities
  • National Laboratories and Autonomous Bodies (established under the auspices of the Indian Council of Agricultural Research (ICAR)
  • Council of Scientific and Industrial Research (CSIR)
  • Department of Atomic Energy (DAE)
  • Indian Institute of Technology (IITs)
  • Indian Council of Medical Research (ICMR)
  • Defence Research and Development Organisation (DRDO) Ministry of Electronics and Information Technology)
  • Department of Science and Technology (DST) engaged in conducting research in technology, science, medicine, and engineering aimed at encouraging Sustainable Development Goals (SDGs).
  • In case of the unspent amount relating to an ongoing project under the company’s CSR policy, the amount shall be transferred by the firm in less than 30 days from the end of the financial year to an exclusive account to be opened by a firm in any scheduled bank.
  • The account shall be designated as ‘Unspent Corporate Social Responsibility Account’, and the funds shall be used towards its obligations under the CSR policy within a period of three financial years from the date of the transfer.
  • In a case where the company fails to utilize the funds at the end of the three financial years, the funds should be transferred to the specified fund mentioned above within a period of thirty days upon completion of the third financial year.

Constitution of the CSR Committee

  • Every company to which CSR criteria is applicable shall constitute a Corporate Social Responsibility of the Board (i.e. CSR Committee).
  • Minimum 3 or more directors must form a CSR Committee.
  • Among those 3 directors, 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 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.

 

Duties of the CSR Committee

  • The CSR Committee shall formulate and recommend a CSR policy to the Board. CSR policy shall point out the activities to be undertaken by the company as enumerated in Schedule VII.
  • CSR Committee shall recommend the amount of expenditure to be incurred on the CSR activities to be undertaken by the company.
  • CSR Committee shall monitor the CSR policy of the Company from time to time.
  • The committee shall establish the transparent controlling mechanism for the implementation of the CSR projects or programs or activities undertaken by the company.

 

CSR Reporting

With respect to CSR Reporting, the provisions are as follows :

  • The Board’s Report referring to any financial year initiating on or after the 1st day of April 2014 shall include an annual report on CSR.
  • In the case of a foreign company, the balance sheet filed shall contain an Annexure regarding a report on CSR.

 

CSR Policy

CSR Policy elaborates the activities to be undertaken by the Company as named in Schedule VII to the Act and spend. The activities should not the same which are done by the company in its normal course of business

  • Contents of CSR Policy should be placed on the company’s website by the Board.
  • The activities mentioned in the policy must be undertaken by the company.
  • The Company can join hands with other companies for undertaking projects or programs or CSR activities and report separately on such programs or projects.
  • The CSR policy shall monitor the projects or programs.

 

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 a 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.

 

How we Assist

 Our CSR Compliance team can help clients prepare, implement and monitor a cohesive CSR policy that is not only compliant with section 135 of the Act but also need-based, strategic, integrated with the value chains, iterative, and geared towards business responsibility reporting. Based on our experience and research, we can offer significant value to our clients (at different stages of the CSR lifecycle), with customized services for planning, assessment, implementation, and evaluation, and also provide the following services.

  • Helps Corporate entities to understand & interpret CSR laws.
  • Advising and Finalising CSR related Investment options
  • Continuous consultancy to Businesses to avoid frauds and non-compliances. 
  • To draft and implement a compact CSR Policy
  • Helps in expenditure evaluation for effective utilization of funds
  • Formation of CSR committee
  • To fulfill Disclosure requirements
  • Evaluate internal control and governance mechanism  
  • Environmental, cultural, and social governance.
  • Assist and assure that companies remain compliant with CSR activities from year to year. 

 

Service Delivery Process followed by White Code Legal:

  • The Client has to register themselves on our website.
  • Once the Client is registered, we raise a Service Request.
  • The Client receives a proforma invoice with an option to confirm and pay now or pay later.
  • Once the Client confirms, our dedicated relationship manager liaisons with our experts, and clients share a list of client information required to deliver the service.
  • Once we receive the information, we take the required steps to deliver the service and the service request is closed.

 

Service Inclusions

  • Professional Fees

 

Service Exclusions

  • GST, Government Fee, and other Additional Taxes

 

Why White Code Legal? 

At White Code Legal we prioritize and always strive to deliver excellence. Keeping a focus on maintaining affordable prices and delivering 100% client satisfaction we aim to make worth every penny our clients spend with us and build a lasting relationship with them.

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