Corporate Social Responsibility (CSR) will no more be a matter to be taken lightly by corporate groups across the country as the Ministry of Corporate Affairs has purposefully included it in the ‘Companies Bill’ to be presented during Parliament Monsoon Session commencing from August 5.
Indian Institute of Corporate Affairs Director General (DG) cum Chief Executive Officer (CEO) Dr Bhaskar Chatterjee stated on Jharkhand’s low CSR activities prevalence wherein implementation of this bill would benefit rural people in connecting with the mainstream. He was speaking as the chief guest on the first ‘National Conference on Inclusive and Impactful CSR’ organised by Indian Institute of Management, Ranchi (IIM-R) on Saturday at the state capital.
According to Section 135 of Companies Bill every company having a net worth of Rs 500 crore or turnover of Rs One thousand crore or net profit of Rs Five crore during a financial year shall constitute a CSR Committee of the Board consisting of three or more directors, out of which at least one shall be an independent director.
If this bill becomes a law, companies contravening the CSR provisions of this section will have to pay around Rs 25,000 to Rs 50,000. Companies are free for not spending the mentioned two per cent but reporting for this failure within 100 words is mandatory to upload on their website.
The Board of every company shall ensure that the company spends, in every financial year, atleast two percent of the average net profits of the company made during the three immediate preceding financial years, in pursuance of its CSR.
“Government departments coordinate on CSR but Private Companies never do the same. It is because of this reason that our ministry is getting into enabling the CSR provision of this Bill,” said Dr Chatterjee. “The job of the CSR committee is to ensure a robust monitoring of every CSR activity projected minutely in each section like agriculture and water management. CSR Committee will also formulate and recommend to the Board a CSR Policy which shall indicate the activities to be undertaken by company,” Dr Bhaskar said.
Discussing on the one sided CSR gain of Corporates, the DG quoted, “Companies set up foundation, trust or NGO to recycle the money back to them with implementation of CSR.” Talking to The Pioneer, Dr Bhaskar shared the cause of the delay of this bill presentation for past one year. “Some or the other way, the Parliament did not meet where Companies Bill 2012 was listed as an item.
Human Rights and Investor Protection are among the 400 areas mentioned in this bill apart from CSR. The bill will help CSR to come from the Backroom to Boardroom.” Contribution to Prime Minister’s Relief Fund, Eradicating extreme hunger and poverty promotion of education, gender equality, women empowerment, reducing child mortality, improving maternal health, combating human immunodeficiency virus, ensure environmental sustainability and employment enhancing vocational skills are the activities which may be included by the companies in their CSR Policy under this bill.
On giving the name to the CSR issue in this bill specifically, Dr Bhaskar said that these rules may be called as CSR Rules 2013 and shall come into force on the date of their publication in the official gazette. Notably, Companies Bill is a reflection of the first guidelines in CSR ever issued in the world on April 1 in 2010 by Department of Public Enterprise stating ‘Charity must begin at Home.’
Requesting for modifications in this proposed bill, a corporate employee Debashish Biswas said, “This centralised bill should be decentralised at State level so that grassroot development in States can take place rapidly.”