India’s Top PSUs 2019

32 CSR Initiatives CSR – Working beyond business interests The enactment of Companies Act, 2013 by the Ministry of Corporate Affairs, GoI was the introduction of CSR as a mandatory provision by imposing statutory obligation on Companies to take up CSR projects towards social welfare activities. This action propelled India to be the only country having regulated and mandated CSR for selected categories of companies registered under the Act. This CSR initiative is expected to help the country in achieving sustainable development goals and public-private partnership in transforming India. The 21st Report of the Parliamentary Standing Committee on Finance was one of the major initiators for bringing the CSR provisions within the statute. It was thereby observed that annual statutory disclosures on CSR presented by the companies would help to check on non-compliance. According to the legislation/act: • Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a CSR Committee of the Board with three or more directors and shall disclose the composition of the CSR Committee • The CSR Committee shall formulate and recommend a CSR Policy indicating the activities to be undertaken by the company as specified along with recommending the amount of expenditure to be incurred on the activities. The CSR policy need to be regularly monitored • The Board of every company after taking into account the recommendations made by the CSR Committee, approves the CSR Policy for the company and accordingly discloses contents in its report and the company’s website • The Board of every company shall ensure that the company spends, in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years. In the report, the Board shall specify the reasons for not spending the amount, on account of the company failing to spend such amount • The company shall give preference to locality/areas around which it operates, for conducting CSR activities