CSR in India

CSR (Corporate Social Responsibility ) in India

CSR (Corporate Social Responsibility) is probably a new concept to Indian society. According to the United Nation, CSR is defined as follows;

'' Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (“Triple-Bottom-Line- Approach”), while at the same time addressing the expectations of shareholders and stakeholders. In this sense it is important to draw a distinction between CSR, which can be a strategic business management concept, and charity, sponsorships or philanthropy. Even though the latter can also make a valuable contribution to poverty reduction, will directly enhance the reputation of a company and strengthen its brand, the concept of CSR clearly goes beyond that. ''

The central government of India has introduced CSR in the Companies Acts 2013. However, based on the field experience of COATA, most of the Indian companies seem not to understand the differences clearly between CSR and conventional charity. Some of HR staff in companies explained that they have been executing CSR activities, even they didn't know any single sections in the Acts and Rules regulating CSR. This implies that Indian companies are interested in and have executed charitable activities which contribute to society. Therefore, COATA thinks that such companies should be supported properly in order to execute Indian CSR, a legal charitable activities, of which detail protocol is defined in a series of the Acts and the Rules. That could maximizes social-economic value of CSR which will be shared among stakeholders in society including the companies themselves.

The section 135 in the Companies Acts 2013 followed by 16 legal documents have regulated CSR in India. The list of the legal documents and outline are summarized as follows;

01. The Companies Acts 2013 <29/08/2013>

Section 135: General rules of CSR

(1) Criteria of company subject to CSR, and Constitution of CSR committee.

(2) Disclose of the composition of CSR committee in the Board's report

(3) Duties of CSR committee

(a) Formulate and recommend CSR policy indicating CSR activities

(b) Recommend the amount of expenditure to be incurred on the CSR activities

(4) Duties of the Board

(a) Approve the CSR policy and the activities, and

Disclose the CSR policy and the activities in the Board report, and website

(b) Ensure undertaking the activities

(5) Duties of the Board

Ensure expenditure for the activities

Specify the reasons in the Board report when it fails to spend

Schedule VII: 10 areas of CSR activities

02. The Companies (Corporate Social Responsibility Policy) Rules 2014 MCA notification G.S.R. 129(E) <27/02/2014>

        1. Short title
       2. Definition of terms
       3. Responsibilities in CSR
           (1) Criteria of companies subject to the CSR responsibilities
           (2) Ceases of the CSR responsibilities
       4. CSR activities
           (1) Unqualified activities (those undertaken as its normal course of business)
           (2) Modality (organizational structure) to undertake the activities
           (3) Collaboration with other companies to uudertake the activities
           (4) Unqualified activities (those undertaken outside India)
           (5) Unqualified activities (those benefit only for the employees and their families)
           (6) Capacity building of the company's personnel
           (7) Unqualified activities (those contribute to any political party)
       5. CSR committee
           (1) Formation of the CSR committee
               (i) Formation for a public company, or private company without independent director
               (ii) Formation for a private company with only 2 directors
               (iii) Formation for a foreign company
           (2) Transparent monitoring mechanism in the Committee
       6. CSR policy
           (1) Requirement of descriptions in the Policy
               (i) List of the project/program with modality and schedule
               (ii) Monitoring progress of the project/program
           (2) Requirement in the Policy
       7. CSR expenditure
Criteria of expenditure
       8. CSR Reporting
           Formality of reporting
           (1) for an Indian company
           (2) for a foreign company

    9. Display of CSR activities on its website
           Duty of display of CSR report in the company's website

03. MCA Notification G.S.R. 130(E) <27/02/2014>
+ Amendment of 10 areas of CSR activities in Schedule VII.

04. MCA Notification G.S.R. 261(E) <31/03/2014>
+ Clarification of one of the areas of CSR in G.S.R.130(E)

05. MCA General circular No.21/2014 <18/06/2014>
+ Clarification of Section 135
> 8 items are clarified
> The response to 18 items requested to be added to the Schedule VII are described

06. MCA Notification G.S.R. 568(E) <06/08/2014>
+ Addition of one area of activity of CSR in Schedule VII

07. The Companies (CSR Policy) Amendment Rules 2014 MCA General circular G.S.R.644(E) <12/09/2014>

+ Amendment of Rule 4(6) in the Rules 2014

08. MCA General circular No.36/2014 <17/09/2014>
+ Confirmation of revoke of the previous Rule4(6) in the Rules 2014 amended by the General circular G.S.R 644(E)

09. MCA Notification G.S.R. 741(E) <24/10/2014>
+ Amendment in Schedule VII

10. The Companies (CSR Policy) Amendment Rules 2015 MCA General circular G.S.R. 43(E) <19/01/2015>
+ Amendment in rules 4 (2): Modality of undertaking CSR activities

11. MCA General circular No.01/2015 <03/02/2015>
+ Constitution of High Level Committee of CSR in the government

12. MCA General circular No.13/2015 <16/09/2015>
+ Extension of period to submit a report by the High Level Committee of CSR

13. MCA General circular No.01/2016 <12/01/2016>
+ Clarification of Section 135 by form of FAQ

> The answers to 23 frequently asked questions

14. MCA General circular No.05/2016 <16/05/2016>
+ Clarification of MCA general circular No 01/2016

15. The Companies (CSR Policy) Amendment Rules 2016 MCA General circular G.S.R. 540(E )<23/05/2016>

+ Amendment in rules 4 (2): Modality of undertaking CSR activities

16. MCA General circular No.11/2016 <15/09/2016>

+ Steering Committee for National CSR Award

17. The Companies Amendment Act 2017 <03/01/2018>

+ Amendments in Section135 for clarification

18. MCA General Circular No. 06/2018 <28/05/2018>