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January 2013
Former Corporate Affairs Minister, Mr Veerappa Moily introduced the Companies Bill, 2011 on 14th December, 2011 in Parliament Lok Sabha. The Bill was cleared by the Cabinet on November 24, 2011. On 18th Dec 2012 the Bill Amendments was presented by Mr. Sachin Pilot, the current Minster of Corporate Affairs, at the Lok Sabha and got it approved.
Corporate Social Responsibility (CSR) has for the first time been recognized in the Company Law. Clause 135 (under Chapter IX Accounts of Companies) of the Companies Bill 2012 deals with Corporate Social Responsibility.
This is the first time where a legal provision is introduced for Corporate Social
Responsibility.
Who will be held accountable? The company will constitute a CSR Committee of the board members consisting of three or more directors At least one committee member shall be an independent director
What will the CSR Committee do? Formulate and recommend to the Board, a Corporate Social
What will be the role of the Board of Directors? Review the recommendations made by the CSR Committee Approve the CSR Policy for the company Disclose contents of the Policy in the company's report/website Shall ensure that the company spends in every financial year, at least two per cent of the average net profits How much will a company be required to spend on CSR? At least 2% of its average net profit made during the three immediately preceding financial years
According to Schedule VII, Activities as a Project Mode, which may be included by companies in their Corporate Social Responsibility Policies are: 1. 2. 3. 4. 5. 6. Eradicating hunger and poverty Promotion of education Promoting gender equality and empowering women Health - reducing child mortality, improving maternal health, combating HIV, AIDS, malaria Employment enhancing vocational skills Contribution to PM's 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 Ensuring environmental sustainability Social business projects Such other matters as may be prescribed
7. 8. 9.
In Budget 2013 is likely to allow some tax-deduction /benefits to companies who spend money for CSR, thus making it attractive for the companies to spend money for CSR. An estimated 2,500 companies fall into this mandatory CSR-reporting category. CSR activities in the first year would be between rupees 9,000 crore and rupees 10,000 crore spent in social welfare.
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