The document discusses corporate social responsibility (CSR) in India as mandated by the Companies Act of 2013. Some key points: - India was the first country to mandate that companies spend 2% of their net profits on CSR activities. This applies to companies with over 500 crore net worth or 1000 crore turnover. - Eligible CSR activities include eradicating hunger, promoting education, gender equality, and environmental sustainability. - Companies must form a CSR committee and develop a CSR policy. They must report on CSR initiatives annually. - The Act aims to promote greater transparency around companies' social and environmental impacts. A minimum of 6000 companies will need to undertake CSR projects to comply.

1. - R A H U L M A D H W A N I
Corporate Social Responsibility
The Companies Act, 2013

2. C.S.R Philanthropy
 A balance of economic,
environmental and social
imperatives (Triple-Bottom-
Line Approach),
 while at the same time
addressing the expectations of
shareholders and stakeholders.
 It includes charity and
sponsorship.
 Philanthropic activities
are only a part of CSR
Meaning of C.S.R

3. C.S.R in India
 India became the first country to mandate spend on CSR activities
through a statutory provision.
 CSR in India has traditionally been seen as a philanthropic activity.
 A large number of companies have been reporting the activities they are
undertaking in this space in their official websites, annual reports,
sustainability reports and even publishing CSR reports.
 The Companies Act, 2013 has introduced the idea of CSR for promoting
greater transparency .
 A minimum of 6,000 Indian companies will be required to undertake
CSR projects in order to comply with the provisions of the Companies
Act, 2013.
 CSR commitments from companies can amount to as much as 20,000
crore INR.

4. Benefits of C.S.R
 Corporate sustainability - a balanced approach to economic
progress, social progress and environmental stewardship
 Communities provide the licence to operate
 Attracting and retaining employees
 Communities as suppliers
 Enhancing corporate reputation
 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.

5. C.S.R made Compulsory
 Section 135 and Schedule VII of the said Act came
into force on 1st April, 2014.
 Section 135 of the Act will be made effective from the
financial year 2014-2015.
 C.S.R compliance made compulsory only for the
companies falling within the preview of Section 135.

6. Section 135
 Companies having
- net worth of Rs 500 crore or more, or
- turnover of Rs 1000 crore or more ,or
- net profit of Rs 5 crore or more during any financial year
shall constitute a Corporate Social Responsibility
Committee of the Board.
 company shall spend, in every financial year, at least two
per cent. of the average net profits of the company made
during the three immediately preceding financial years,
in pursuance of its Corporate Social Responsibility Policy

7. Schedule VII
 CSR activities to include:
 - eradicating extreme hunger and poverty
 - promotion of education
 - promoting gender equality and empowering women
 - reducing child mortality and 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

8. C.S.R Committee
 Constituted by 3 or more directors; At least one CSR
committee member should be an independent
director.
 Mandate of the said CSR committee shall be:
− To formulate and recommend a CSR policy to the
Board;
− To recommend amount of expenditure to be
incurred on CSR activities;
− To monitor the CSR policy of the company from time
to time.

9. C.S.R rules by MoCA
 Net Profit’ means, net profit before tax as per books of accounts and
shall not include profits arising from branches outside India.
 Reporting will be done on an annual basis commencing from Financial
Year 2014-15
 Tax treatment of CSR spend will be in accordance with the IT Act as
may be notified by the Central Board of Direct Taxes (CBDT)
 The CSR Committee shall prepare the CSR Policy of the company
 A company may also implement its CSR programs through not-for-
profit organisations
 Only activities which are not exclusively for the benefit of employees of
the company or their family members shall be considered as CSR
activity
 Companies shall report, in the prescribed format, the details of their
CSR initiatives in the Directors’ Report and in the company’s website.

10. Board of the Company
 Approve the CSR Policy for the company and
disclose contents of such Policy in its report and also
place it on the company’s website, and
 ensure that the activities as are included in CSR
Policy of the company are undertaken by the
company, and
 ensure that the company spends, in every financial
year, at least two per cent of the average net profits.
 If the Company fails to spend such amount, the
Board shall, in its report specify the reasons for not
spending the amount.

11. Business Responsibility Reporting
 SEBI by issuing a circular mandating the top 100
listed companies to report their Environmental,
Social and Governance initiatives.
 Business Responsibility shall be part of the Annual
Reports
 The BRR(Business Responsibility Report) requires
companies to report their performance on the nine
NVG(Non Voluntary Guidelines) principles.

12. 9 NVG Principles
 1: Businesses should conduct and govern themselves with Ethics, Transparency
and Accountability
 2: Businesses should provide goods and services that are safe and contribute to
sustainability throughout their life cycle
 3: Businesses should promote the wellbeing of all employees
 4: Businesses should respect the interests of, and be responsive towards all
stakeholders, especially those who are disadvantaged, vulnerable and
marginalized.
 5: Businesses should respect and promote human rights
 6: Business should respect, protect, and make efforts to restore the
environment
 7: Businesses, when engaged in influencing public and regulatory policy, should
do so in a responsible manner
 8: Businesses should support inclusive growth and equitable development
 9: Businesses should engage with and provide value to their customers and
consumers in a responsible manner

13. C.S.R Process
 Step one: Developing a CSR strategy and policy
 Step two: Operationalising the institutional mechanism
 Step three: Due diligence of the implementation
partner
 Step four: Project development
 Step five: Project approval
 Step six: Finalising the arrangement with the
implementing agency
 Step seven: Progress monitoring and reporting
 Step eight: Impact measurement
 Step nine: Report consolidation and communication

14. Grey Areas
 penal consequences of failure to spend for C.S.R or an explanation in
the director’s report.
 no provision specified for loss making companies
 whether Schedule VII is inclusive of exhaustive
 whether qualifying private companies would be required to appoint a
third director(Independent) to comply with the CSR provisions.
 Whether excess spend of over and above 2 percent mandatory CSR
spend in any particular financial year can be carried forward in
succeeding financial year or not.
 tax treatment of CSR spend will be in accordance with the Income-tax
Act, 1961 as may be notified by Central Board of Direct Taxes (CBDT)

15. Conclusion & Suggestions
 Restrictive scope and nature of activities listed under “Schedule VII” as
recommended CSR activities
 Restrictive geographic focus of CSR activities in conflict with inclusive
development agenda
 Promotion of Corporate Social Responsibility ahead of Principles of
Corporate Responsibilities
 Contribution to Prime Minister’s National relief Fund and such other
funds as set up by Government
 Activities not exclusively for employees or their families should be
considered as CSR
 Timeline of CSR projects
 FCRA regulation (Foreign Contribution Regulation Act)

16. T H A N K Y O U
The End