COVID-19 & CORPORATE SOCIAL RESPONSIBLITY
The Companies Act, 2013 lays down the rules and guidelines for different companies to be followed while carrying out their business. In April 2014, the Ministry of Corporate Affairs issued a notification, amending the said Act and inserted Section 135 and Schedule VII, and also created Companies (Corporate Social Responsibility Rules), thereby giving them effect from April 1, 2014.
According to the CSR Rules, corporate social responsibility has been defined and not only restricted to (1) the programs or activities undertaken by the company according to those provided under the Schedule; or (2) the programs or activities which maybe undertaken by the company’s CSR Board in light of the suggestions which are provided by the CSR Committee working according to the CSR Policy of the company.
As a result, section 135 lays down certain financial conditions that are required by the companies to be met, in order to carry out the different social activities provided under schedule VII. These are-
The companies which qualify these criteria, are required to allocate 2% of their net profits towards such CSR activities. Moreover they are also require to formulate a CSR committee which should consist of three or more Board members, who would constitute as a Board taking decisions regarding CSR. Such a board shall work according to the recommendations given by the CSR committee regarding the activities to be taken up, the expenditure taking place to carry out such activities etc.
The main aim of CSR is to make sure that companies keep the view of societal development into consideration and contribute to the same by performing such CSR related activties. Through the way of CSR, companies become legally bound to perform such tasks and ultimately replenish the resources that such organisations acquire from the society. These activities include providing education, healthcare, preservation of natural heritage and more, as laid down under schedule VII of the CSR Rules.
Recently, in light of the increasing COVID-19 cases in India, the Government and the Ministry of Corporate Affairs released a new notification, according to which the companies allocating and spending their funds in performing corona virus related activities which have been mentioned under (i)-(xii) of Schedule VII of the CSR Rules related to health care, sanitation and disaster management, shall be considered eligible as CSR activity.
