Corporate Social Responsibility - 15 Mints Seminar Notes

Corporate Social Responsibility - 15 Mints Seminar Notes

SYNOPSIS
Introduction
Applicability
CSR Expenditure
CSR Committee
CSR Activities
Activities Not considered as CSR
Consequences of Non-Compliance
Cessation
Important points

INTRODUCTION
          CSR is governed by section 135 of Companies Act 2013. CSR can be briefly defined as the corporate giving back to the society.
           The concept of CSR is not new to India, it was started a way back in Mahatma Gandhi’s period and was known as Trusteeship but now in recent decades it has been coined as CSR.
          Boosting profits is no longer the sole business performance indicator for the corporate and they have to play the role of responsible corporate citizens as they owe a duty towards the society, where they operate and draw resources.
          CSR is the way companies manage their business to produce an overall positive impact on society through economic, environment and social action. CSR is used as a tool to increase the reputation of companies in the eyes of society.

APPLICABILITY
 Section 135(1)
             Companies which have :
Net worth    500 Crore (or) more (or)
Turnover     1000 Crore (or) more (or)
Net Profit    5 Crore (or) more


Including their holding, subsidiary or foreign companies having branches in India exceeding the limit in immediately preceding financial year.

CSR EXPENDITURE
         A company should spend at least 2% of its average Net Profit made during the 3 immediately preceding financial year. If the company has not completed 3 years, then since its incorporation.

CSR COMMITTEE
        A CSR committee should be formed in those companies which were met with the applicability criteria. The committee should comprise of
Public company       2 directors and1 independent director
Private company     2 directors
Foreign company    2 directors , 1 being resident in India

ROLE
To frame CSR policies and recommend to the board .
Recommend the amount of  expenditures to be incurred in the activity.
Monitor the CSR activities from time to time and
Display CSR report along with the Board report, Annual report during AGM(Annual General Meeting) and in its website.    

CSR ACTIVITES
     Schedule VII of Companies Act 2013 comprise the list of CSR activities.

• Eradication of Hunger, Poverty and Malnutrition.
• Promoting Education.
• Setting up homes, hostels, orphans, old age homes etc.
• Protection of Flora and Fauna.
• Restoration of Historical site.
• Benefit for War Widows and their Dependents.
• Promoting Sports, Olympics, Paralympics..etc.
• Contribution to Research and Development.
• Slum Area Development.
• Funding  for COVID 19 relief. (Finance Act 2020, 23/3/2020).

                                                                        (refer schedule VII for more)

ACTIVITIES NOT CONSIDERED AS CSR
Contributing directly or indirectly to political party.
Programs or activities benefit only to its employees.
Events like marathons, award functions, advertisement, sponsorship for TV programs.

CONSEQUENCES OF NON COMPLIANCE
        Company which fails to comply with sec 135 have to pay fine of minimum 50 thousand rupees which may extend to 25 lakh.
Every officer in default will be punished with an imprisonment for a term which may extend to 3 years or with a fine of minimum 50 thousand rupees which may extend to 5 lakh or with both.

CESSATION
       The CSR Rules specify that a company which does not satisfy the specified criteria for a consecutive period of three financial years is not required to comply with the CSR obligation.
 
IMPORTANT POINTS

• CSR activities or programs undertaken ONLY in India shall amount to   CSR expenditure.
• Surplus arising out of the CSR project or programs shall not form part of business profit.
• Infosys Limited has topped CSR in 2020 spent nearly Rs.360 Crs.
• Net profit -- computed according to Financial Statements (P/L  A/C).
• Net worth -- Asset -  Liabilities ( own-owe ).

• Turn over -- Yearly sales or total receipts.

 

 

 

Presented by

Niveedha

GMAT Students

Magme School of Banking