CSR mandatory for corporates from April 1
Posted on Jan 29 2014 | IANS
Chandigarh, Jan 29 : Mere compliance with rules or carrying out welfare initiatives for the staff does not fall in the ambit of corporate social responsibility (CSR), a senior functionary said here Wednesday.
Under the new Companies Act, CSR will become mandatory for companies with profit of Rs.5 crore and more, said Bhaskar Chatterjee, director general and chief executive officer of the Indian Institute of Corporate Affairs, Ministry of Corporate Affairs.
Chatterjee said: "CSR, which is made compulsory under the Companies Act and was passed by parliament, comes into effect from April 1, 2014,"
"All companies with turnover of Rs.1,000 crore and more -- or a net worth of Rs.500 crore and more or net profit of Rs.5 crore and more -- will have to spend at least two percent of their three-year average profit every year on CSR activity," he said.
Nearly 150 environment, CSR professionals and experts are attending the two-day meet organised by a Delhi-based non-governmental organisation Greentech Foundation in support with the Indian Institute of Corporate Affairs.
"From April 1, all 16,245 registered companies have to nominate three members for their CSR committee from their board. Companies cannot do whatever they want and claim it as a CSR activity according to the new law," Chatterjee said.
"Under the new rules coming into effect, anything done the employees is not CSR, it is a human resource activity. Compliance with any rule or regulation is not CSR. Companies should take up this role and voluntarily do it beyond the rule," he said.
"Any activity done must have been the part of the CSR policy of the company which must also be made available on the company's website. CSR must be conducted by professional implementation using implementing agencies," Chatterjee pointed out.
He added: "The project should have a starting time and an ending time. Any activity that has not been given board approval, passed by the board and does not have a board resolution number is not CSR."
Kamleshwar Sharan, president of Greentech Foundation, said that with the new rules, the CSR economy will grow many times.
"Unlike in the past, the companies will now be required to spend in structured manner. The old way of writing a cheque for religious cause or an activity that benefits their own workers will not be considered CSR," Sharan said.
"It is estimated that registered companies in India will spend Rs.20,000 crore on CSR activities alone in 2014 and 2015. This means that there will also be a need for whole lot of CSR professionals and consultants and other specialists," he said.