Government sets up committee to review the enforcement of CSR provisions

The Ministry of Corporate Affairs (MCA) has constituted 12-member committee to review enforcement of Corporate Social Responsibility (CSR) provisions under Companies Act, 2013. It will be headed by Regional Director (Western Region) Manmohan Juneja. Besides, there will be two sub-committees viz. legal and technical that will go into various aspects in relation to compliance with CSR provisions.

Committee’s Terms of References

The committee will review functioning of CSR enforcement and recommend uniform approach for its enforcement. It will revisit guidelines for enforcement of CSR provisions and basis, including structure of Centralised Scrutiny and Prosecution Mechanism (CSPM).
It will also look at methodologies for monitoring of compliance by companies with CSR norms for having an effective CSPM. It will also revisit Schedule VII of Companies Act, 2013 pertaining to the board list of CSR activities that can be taken up under the Act on basis of references received from various stakeholders.

Background

Under Companies Act, 2013, certain class of profitable companies (entities) are required to shell out at least 2% of their three-year annual average net profit towards CSR activities. In case of non-compliance, these companies have to furnish reasons to Ministry of Corporate Affairs (MCA). In recent times, MCA has come across rising instances of non-compliance with CSR requirement. Last year, MCA had sought explanation from many companies for not complying with CSR norms. As per official data, 6,286 companies spent Rs. 4,719 crore towards various CSR activities in 2016-17, with total number of such projects taken up stood at 11,597.

Month: Current Affairs - April, 2018