A Conceptual Study of Corporate Social Responsibility (CSR) under Companies Act, 2013

International Journal of Economics and Management Studies

© 2016 by SSRG - IJEMS Journal

Volume 3 Issue 11

Year of Publication : 2016

Authors : Kanchan Mukund Sananse

10.14445/23939125/IJEMS-V3I6P107

How to Cite?

Kanchan Mukund Sananse, "A Conceptual Study of Corporate Social Responsibility (CSR) under Companies Act, 2013," SSRG International Journal of Economics and Management Studies, vol. 3,  no. 11, pp. 6-8, 2016. Crossref, https://doi.org/10.14445/23939125/IJEMS-V3I6P107

Abstract:

Corporate Social Responsibility (CSR) also called as Corporate Citizenship, Corporate Conscience, Social Performance or Sustainable Responsible Business or just Responsible Business. It is a form of corporate self-regulation, integrated into a business model. „Since ancient times we Indians have followed the philosophy that „Service to mankind is service to God‟. Corporate Social Responsibility (CSR) is based on moral grounds. . It helps to realise that what is required by corporate entity to pursue its long term goals which are good for the society and its welfare. It is an obligation beyond the lawIt is a continuous commitment made by the business entity to behave ethically and through that, contribute to the economic development of its own business and also of the society and the nation as a whole. The CSR activity is not forced by the law and is completely self driven till August, 2013. As stated in Corporate Social Responsibility Voluntary Guidelines 2009, in order to assist the businesses to adopt responsible governance practices, „the Ministry of Corporate Affairs has prepared a set of voluntary guidelines which indicate some of the core elements that businesses need to focus on while conducting their affairs. The Lok Sabha of India on 18th December, 2012 passes the Companies Bill which requires companies to spend 2 per cent of their net profit for Corporate Social Responsibility (CSR) activities, thus probably making India the first country in the world where CSR will become a mandatory requirement for companies once the Bill becomes an Act. Ministry of Corporate Affairs has recently notified Section 135 and Schedule VII of the Companies Act as well as the provisions of the Companies (Corporate Social Responsibility Policy) Rules, 2014 i. e. CSR Rules which has come into effect from 1 April 2014 The Companies Act, 2013, enacted on 29th August 2013 on accord Hon‟ble President‟s assent, has a potential to be a historic milestone, as it aims to improve corporate governance, simplify regulations enhance the interests of minority investors and for the first time legislates the role of whistle- blowers. The new law will replace the nearly 60 year old Companies Act, 1956. Clause 135 of the Companies Bill (the “CSR Clause”) requires a qualifying corporation to spend on CSR at least 2 percent of its average net profits made in the preceding three financial years (the “2 Percent Formula”). A qualifying company that fails to spend the required amount will have to explain that failure in the report of the board of directors. Certain criterion / list are also suggested from which companies can choose to undertake CSR activities depending upon the area in which the company is interested. This is an indicative and not an exhaustive list.

Keywords:

Corporate Social Responsibility (CSR), Companies Act, 2013.

References:

[1] Chitale Amey Satish (2013), „Corporate Social Responsibility Necessity, Not just Charity‟, Think line, 88 publication, A Guna Gaurav Nyas Publication, Nashik
[2] (2014) The Wikipedia website Available: http://en.wikipedia.org/wiki/Corporate_social_responsibility
[3] Available: http://www.developmentexpeditions.com/?page_id=129
[4] India, Ministry of Corporate Affairs, Corporate Social Responsibility Voluntary Guidelines 2009.
[5] Current Labour Reports, January, 2013, p 25
[6] (2015) The Companies Act website Available: http://gtw3.grantthornton.in/assets/Companies_Act-CSR.pdf
[7] (2013) The Companies Bill Available: http://www.caclubindia.com/articles/ new - companies - bill - 2012- and -provisions - relating – to – corporate - social – responsibility - 18242.asp#.UwbIEmKSzWs
[8] Current Labour Reports, January, 2013, pp 27-28