CORPORATE SOCIAL RESPONSIBILITIES AS PER COMPANIES ACT, 2013

CSR is defined as the sense of responsibility of a company towards the environment. It includes both ecological and social in which it operates. CSR is also known as the “triple-Bottom-Line-Approach”, which helps the company to promote its commercial interests as well as the responsibilities towards the society at large. It is not charity or mere donations. Through this company can fulfill its responsibilities through the waste and pollution reduction process. By contributing educational and social programs, by being environmentally friendly, or by undertaking similar nature activities. It is a way of doing business, by which corporate entities contribute to the social good. Use of CSR to integrate economic, environmental, and social objectives with the company’s operation and growth.

The Companies Act, 2013 has formulated in section 135, companies (corporate social responsibilities) Rules, 2014 and Schedule VII which prescribes mandatory provisions for companies to fulfill their corporate social responsibility.

CORPORATE SOCIAL RESPONSIBILITIES (CSR) PROVISIONS ARE APPLICABLE ON:

• On company including its holdings or subsidiary having:
• The net worth of Rs 500 crore or more,
• Turnover of Rs 1000 crore or more,
• Net profit of Rs 5 crore or more
• Immediately preceding financial year.

A foreign company having its branch company in India, which fulfills the specified above criteria. If a company ceases to meet the above criteria for three consecutive financial years. It is not required to comply with CSR provisions such time it meets the specified criteria.

Small or Medium Enterprises should be asked to promote corporate social responsibilities, through taking their respective fiscal capacity and by not overstretching their limited resources.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE CONSISTS OF:

• Every company on which CSR is applicable, consists of 3 or more directors, out of which at least 1 director shall be an independent director. If in a company, it is not required to appoint an independent director, then it shall have 2 or more directors in the committee.
• Every company on which CSR is applicable, consisting of 2 directors in the case of a private company having only 2 directors on its board.
• Every company on which CSR is applicable consists of at least 2 persons in the case of a foreign company of which one person shall be its authorized person one should be resident in India and the other nominated by the foreign company.

FUNCTIONS OF CORPORATE SOCIAL RESPONSIBILITY

• CSR policy shall indicate the activities to be undertaken by the company.
• Monitor the CSR policy of the company from time to time.
• CSR plays a common role by improving a company’s brand, controlling costs that attract top-quality talent, and facilitate long-term financial success.
• It gives chance to all the employees of an organization to contribute towards the society, environment, etc.
• Institute a transparent monitoring mechanism for the implementation of CSR projects, programs, or activities undertaken by the company.

NEED OF CORPORATE SOCIAL RESPONSIBILITIES

Corporate Social Responsibilities are responsible for generating goodwill for a company either directly or indirectly. This includes:

• Help it retaining companies their goals in long run, by making employees more loyal.
• Make companies more legitimate.
• Help them in accessing a great market share.
• Since companies act more ethically, they face fewer legal hurdles.
• Help in stabilizing the stock markets in both the short and long run.
• As companies’ self – regulate and work more ethically, so it helps in limiting state involvements in corporate affairs.

CSR motivates companies to cooperate and communicate with each other, their customer, and the administrative machinery. It helps the company and shareholders for the development of a country’s economy at a macro-level.

CSR LAWS IN INDIA

Companies Act, 1956 made CSR compulsory. Under the notified date 27.02.2014, under section 135 of the new Act, i.e., Companies Act, 2013. It is compulsory for all companies either private, public or government. Provided that they should meet anyone or more than one of the following fiscal criteria.[i] Above mentioned.

CSR activities listed in schedule VII includes:

“Activities which may include by companies in the CSR policies are:

• Eradicating hunger, poverty, and malnutrition, promoting health care including preventives and sanitation including contribution to the Swachh Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available hygienic drinking water.
• Promoting education, including specific education and employment enhancing, vocabulary skills especially among children, women, elder citizens, and differently-abled and livelihood enhancement projects.
• Promoting gender equality, empowering women, setting up homes and hostels for women and orphans, setting up old age homes, daycare centers, and such other facilities. For reducing inequalities faced by socially and economically backward groups.
• Ensuring environment sustainability, ecological balance, protection for flora and fauna, animal welfare, agroforestry, conservation of natural resources.
• Protection of national heritage, art, and culture including restoration of buildings and historical sites, setting up public libraries, promotion, and development of traditional art and handicrafts.
• Measures for the benefits of armed forces, war widows, and their dependents.
• Training to promote rural sports, nationally recognized sports, Olympic sports, and Paralympic sports.
• Rural development projects.
• Slum area development projects.
• Contribution to the prime minister’s national relief funds or any other funds set up by the central government for socio-economic development and welfare of the scheduled caste, tribes, other backward classes, minorities, and women.”

WHY CSR IN INDIA IS NOT WORKING?

Esteemed scholars have claimed that companies while having fiscal resources does not have sufficient knowledge of existing public problems and policy, measures. Due to this, their CSR efforts are misguided and do not help the public in the long run. As per section 135[ii], CSR efforts equated with the money spent. It should hold at least 2% of the net profit. However, companies are not very transparent in declaring their CSR income.

CONCLUSION

Corporate Social Responsibility was legislated in India with the hope that it would bring changes in the attitude of corporate institutions. It would give back to society in a big way. It creates a responsibility of a company towards the environment. It helps to create commercial interests and social responsibilities towards the environment. Despite all the good intentions, has failed to cover a lot of grounds. One of the major drawbacks, it applies to companies whose net profit exceeds 5 crores. Therefore, the need of the hour is to change the CSR laws and amend them to become long-term, which simple and easier to monitor.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.