handbook-on-corporate-social-responsibility-in-india

More documents

Recommendations

Info

The Companies Act, 2013 In India, the concept of CSR is governed by clause 135 of the Companies Act, 2013, which was passed by both Houses of the Parliament, and had received the assent of the President of India on 29 August 2013. The CSR provisions within the Act is applicable to companies with an annual turnover of 1,000 crore INR and more, or a net worth of 500 crore INR and more, or a net profit of five crore INR and more. The new rules, which will be applicable from the List of activities under Schedule VII Reducing child mortality and improving maternal health Environmental sustainability Eradication of extreme hunger and poverty And such other matters as may be prescribed Combating HIV-AIDS, malaria and other diseases Social business projects Employment enhancing vocational skills fiscal year 2014-15 onwards, also require companies to set-up a CSR committee consisting of their board members, including at least one independent director. The Act encourages companies to spend at least 2% of their average net profit in the previous three years on CSR activities. The ministry’s draft rules, that have been put up for public comment, define net profit as the profit before tax as per the books of accounts, excluding profits arising from branches outside India. Promotion of education Gender equity and women empowerment Contribution to Prime Minister’s relief fund and other such state and central funds The Act lists out a set of activities eligible under CSR. Companies may implement these activities taking into account the local conditions after seeking board approval. The indicative activities which can be undertaken by a company under CSR have been specified under Schedule VII of the Act. The draft rules (as of September 2013) provide a number of clarifications and while these are awaiting public comment before notification, some the highlights are as follows: • Surplus arising out of CSR activities will have to be reinvested into CSR initiatives, and this will be over and above the 2% figure • The company can implement its CSR activities through the following methods: -- Directly on its own -- Through its own non-profit foundation set- up so as to facilitate this initiative -- Through independently registered non-profit organisations that have a record of at least three years in similar such related activities -- Collaborating or pooling their resources with other companies • Only CSR activities undertaken in India will be taken into consideration • Activities meant exclusively for employees and their families will not qualify • A format for the board report on CSR has been provided which includes amongst others, activity-wise , reasons for spends under 2% of the average net profits of the previous three years and a responsibility statement that the CSR policy, implementation and monitoring process is in compliance with the CSR objectives, in letter and in spirit. This has to be signed by either the CEO, or the MD or a director of the company Governance Clause 135 of the Act lays down the 12 PwC
guidelines to be followed by companies while developing their CSR programme. The CSR committee will be responsible for preparing a detailed plan on CSR Role of the board and the CSR committee Role of the board Form a CSR commiittee Approve the CSR policy Ensure implementation of the activties under CSR Ensure 2% spend Disclose reasons for not spending the amount (if applicable) Net worth > 500 Crore INR Turnover > 1000 Crore INR Net profit > 5 Crore INR activities, including the expenditure, the type of activities, roles and responsibilities of various stakeholders and a monitoring mechanism for such activities. The CSR committee can also ensure that all the kinds of income accrued to the company by way of CSR activities should be credited back to the community or CSR corpus. CSR committee Three or more directors with at least one independent director Formulate and recommend a CSR policy to the board Recommend activities and the amount of expenditure to be incurred Monitor the CSR policy from time to time Reporting The new Act requires that the board of the company shall, after taking into account the recommendations made by the CSR committee, approve the CSR policy for the company and disclose its contents in their report and also publish the details on the company’s official website, if any, in such manner as may be prescribed. If the company fails to spend the prescribed amount, the board, in its report, shall specify the reasons. Business responsibility reporting The other reporting requirement mandated by the government of India, including CSR is by the SEBI which issued a circular on 13 August 2012 mandating the top 100 listed companies to report their ESG initiatives. These are to be reported in the form of a BRR as a part of the annual report. SEBI has provided a template for filing the BRR. Business responsibility reporting is in line with the NVG published by the Ministry of Corporate Affairs in July 2011. Provisions have also been made in the listing agreement to incorporate the submission of BRR by the relevant companies. The listing agreement also provides the format of the BRR. The BRR requires companies to report their performance on the nine NVG principles. Other listed companies have also been encouraged by SEBI to voluntarily disclose information on their ESG performance in the BRR format. Handbook on Corporate Social Responsibility in India 13
Page 1 and 2: www.pwc.in Handbook on Corporate So
Page 3 and 4: Message from the Mentor and Chairma
Page 5 and 6: About the handbook
Page 7 and 8: What is CSR? The global context Whi
Page 9 and 10: Global principles and guidelines A
Page 11: Clause 135, Companies Act, 2013 Han
Page 15 and 16: CSR: Planning and strategising The
Page 17 and 18: Activities • Reviewing the past a
Page 19 and 20: Issue Sub-issue Description Compete
Page 21 and 22: on the other. However, what is impo
Page 23 and 24: CSR and SMEs Handbook on Corporate
Page 25 and 26: certain extent as the other partner
Page 27 and 28: Appendix 2 Designing a volunteering
Page 29 and 30: Appendix 4 CII and Credibility Alli
Page 31 and 32: About CII The Confederation of Indi

handbook-on-corporate-social-responsibility-in-india

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?