Corporate Social Responsibility

“ARE YOU A GOOD CORPORATE CITIZEN?”

CSR might be defined as corporate strategic philanthropy, even narrowed to “effective public relations” where the excellence of the organization and build accommodating relationships with stakeholders. It can be viewed as cause-related marketing. At best, it can be conceived of as knowing, achieving, and communicating about higher standards of performance in the public or community interest.

Consideration of corporate social responsibility is as old as organizations themselves. The central question always has been this: Does each organization, as it strives to achieve its mission and vision, add value to the society which explores its existence? Long before consideration focused on business, especially large corporations, questions about CSR addressed the rationale and acceptability by the government.

Here are the related provisions that are dealt with Corporate Social Responsibility in accordance with Companies (corporate social responsibility) Rules 2014.

Sl.no     Provisions Description/ explanations
1. Governance
  • Sec.135 of Companies Act,2013
2. Applicability

To

  • Every Companies having net worth of Rs.500 crores or more. (or)
  • Every companies having turnover of Rs.1000 crores of more. (or)
  • Every companies having net profit of Rs.5 Crores or more.
3. Minimum limit for Spending
  • Atleast 2% of their Average net profits accrued over last 3 years.
  • List of Activities may be initiated on CSR projects have been specified in schedule 7 of the Act, along with board’s approval.

4. Methods of implementation
  • On Suo-motto basis

  • Via Not for profit venture setup.

  • Collaborating or pooling their resources with other companies.

5. Domains where CSR activities are carried in
  • Education
  • Communication Ecology and health care
  • Business sustainability
  • Diversity.
6. Benefits/Advantages
  • Enhances business relationships with clients

  • It encourages both professional and personal development.

  • Ability to have positive impact in the society.

  • Cost Reduction

  • Employee retention.

7. Critics/Disadvantages
  • Larger companies take advantage as that costs would be included in cost of production, which inturn burdens the end customers.

  • Costs and expenses are needed for CSR Committee to set-up.

8. Disclosure
  • Disclosure of the reason for not spending the said amount is a compliance of the provisions. Non-disclosure, or absence of the details about the CSR policy and its implementation in the Boards’ report would attract penalties
9. Penalty for Contravention
  • For Companies: Failure to comply fine of not less than 50,000 which may extend to 25 lakhs.

  •  For Officer-in-default:  Imprisonment upto 3 years or with fine of not less than 50,000 which may extend upto 25 lakhs for every officer-in-default or with both.

 

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