Corporate Social Responsibility (csr)
United Nations Industrial Development Organization (UNIDO) defines CSR as responsiveness of businesses to stakeholders’ legal, social and environmental expectations.
- It is a management concept which integrates environmental and social concerns with business operations.
- India is the first country in the world to make corporate social responsibility (CSR) mandatory, following an amendment to the Companies Act, 2013 in April 2014.
- The amendment notified in the Companies Act, 2013 requires companies with a net worth of INR 500 crore or more, or an annual turnover of INR 1000 crore or more, or net profit of INR 5 crore or more, to spend 2 percent of their average net profits of three years on CSR.
- The inclusion of CSR is an attempt by the government to engage the businesses with the national development agenda.
- Schedule VII of the act specifies the activities which can be undertaken by a company under CSR like (Eradicating hunger and poverty; promote education, gender equality, women empowerment; ensure environmental sustainability etc.)
- Recently the Companies Amendment Act, 2019 was passed to provide for specific penal provisions for noncompliance to CSR rules.
Key Highlights of the Amendment Act:
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The Act also re-categorizes 16 compoundable offences, such as failure to file returns and issuance of shares at a discount, as civil defaults.
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Companies to have a verifiable registered physical address.
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Shifting of routine matters from NCLT to central Government for de-clogging NCLT.
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The Act mandates that companies transfer unspent CSR money in a financial year to an escrow account meant for CSR for three years, after which any unspent amount must be transferred to a fund specified by the government.