The Modi 2.0 government is planning to bring 30 amendments to the Companies Act, 2013 in the ongoing Budget session of Parliament. A high-level panel on CSR is expected to introduce increased disclosures for delivery of transparency in spending on these activities. All companies with a net worth of Rs 500 crore or more, turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more are expected to spend 2% of their average profit of the previous three years on CSR activities every year. This amendment is meant to enable companies to spend their Corporate Social Responsibility (CSR) funds over a period of three years instead of the current year itself.
It is one among the over 30 key amendments to the Act proposed by the Ministry of Corporate Affairs (MCA), which would improve the ease of doing business in India and industry compliance. A few more amendments have been added to the proposed bill apart from those made in the ordinance.
To amend the Companies Act, the government had first issued an ordinance in November, which would have ceased to be operational from January 21. It was then re-promulgated in January since the Bill to amend the Act was pending in the Rajya Sabha. The ordinance amended as many as 16 sections of the Act, bringing about 16 corporate offenses under the ambit of civil liability. Offenses like non-filing of annual returns and financial statements within a specified time frame, accepting more than a certain prescribed number of directorships beyond a period and managerial remunerations in case of inadequate profits, which earlier attracted criminal punishments, are now liable for a penalty.
At present, companies are simply required to disclose their CSR policy and the composition of their CSR committee. The government again plans to present an amendment bill in the 40-day session of the Parliament ending July 27. The motion will be laid before the Cabinet for endorsement by a high-level panel on CSR. The movement comes in the backdrop of reports of companies allocating CSR funds to trusts related to their own group. The panel will also make recommendations to deal with implementation concerns related to CSR expenditure. Placing curbs like new electronic disclosure forms to provide the government with relevant data for social audit could be another highlight. A new measure of evaluating CSR output is presumed to be promoted which could incorporate a platform to rate implementing agencies.
This article has been contributed by SUBAH, an enabler of CSR in India.
SUBAH is an enabler of CSR rendering advisory and consultative services on CSR in India to industry, businesses and non-profit organizations. They enable alliances between organizations with corresponding social purposes. With a mission to build an enduring and sustainable culture for a better tomorrow, Subah is assembling an ever-growing diverse community of conscious stakeholders, groups, & citizens. Connect with them at SubahTeam@gmail.com.
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