After the enactment of the Companies Act, 2013, amongst a no. of core areas, CSR is the one which is much debated and discussed by the Ministry and Law Chambers. This is the area, where the Government has kept an eye since the Draft CSR rules be released. Government is emphasizing on CSR Initiatives by the Industry. That resulted into the release of CSR Rules a month ago before the Companies Act came into existence. Ministry wanted the corporate to be aware about the CSR rules so that the spending in the specified areas of the society be made with the start of Financial year 2014-15.
During the last one year, a no. of debates have been undertaken and the matter has been raised in the Parliament and in other law chambers of the country with respect to CSR. And the government in replies had made a no. of amendments in the Schedule VII via Notifications, Circulars, Amendments in the CSR Rules and by issuing the Removal of Difficulty Orders but still there is a lot of ambiguity among the professionals, corporate and industry with respect to calculation and spending of the CSR money. In a recent article in Economic Time, the quantum of CSR spending has been estimated about 60% of the actual. This is just because of the confusion of the corporate on the related matter. The industry need to be taught and made aware by the Ministry, Law Chambers and the Professionals via seminars and other various areas. Only then the Government can achieve for which the CSR was imposed
There is much confusion among the corporate that what are the main activities where the CSR money has to be spent. The Government vide Notification GSR 130 (E) DATED 27.02.2014 released the final rules including the areas where the CSR funds has to be spent. These are:
(i) eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and making available safe drinking water;
(ii) promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects;
(iii) promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;
(iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water;
(v) protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts;
(vi) measures for the benefit of armed forces veterans, war widows and their dependents;
(vii) training to promote rural sports, nationally recognised sports, paralympic sports and Olympic sports;
(viii) contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;
(ix) contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government;
(x) rural development
With the passage of time during the last year and depending upon the various circumstances in the country, the ministry amended the CSR Rules and inserted a no. of other activities in the above stated Schedule and inserted the various other areas where the CSR Money can be spent. The summarize details of such areas are as follows:
a. Vide Notification G.S.R 261(E) dated 28.02.2014 the word “promoting preventive health care was amended with the words “promoting health care including preventive healthcare’”
b. Vide Notification G.S.R. 568(E) dated 06.08.2014 Central Government made the other amendments in Schedule VII by insertion of point no. xi as follows:
(xi) slum area development.
Explanation.— For the purposes of this item, the term ‘slum area’ shall mean any area declared as such by the Central Government or any State Government or any other competent authority under any law for the time being in force.”
c. Vide Notification G.S.R.741 (E) dated 24.10.2014, following further amendments were made in item no. I and item no. iv of the Schedule under which main emphasis was made on “SWATCH Bharat Abhiyan” and “Clean Ganga Fund” The said amendment was as follows:
(i) In item (i), after the words “and sanitation”, the words “including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation” shall be inserted;
(ii) In item (iv), after the words “and water”, the words “including contribution to the Clean Ganga Fund setup by the Central Government for rejuvenation of river Ganga;” shall be inserted.
Further Initiatives and Amendments by the Government:
The Central Government after receiving a no. of representations from the stakeholders, released the clarification with regard to the provisions of Section 135 of Companies Act 2013 vide General Circular No. 21/2014 dated 18/06/2014.
And further for the betterment of CSR Initiatives and spending, Government constituted the High Level Committee under the Chairmanship of Sh. Anil Baijal, Former Secretary to Govt. of India. This committee was constituted to suggest the Government regarding measures for monitoring the progress of implementation of Corporate Social Responsibility (CSR Policies) by the companies at their level
Conclusion: Now, in the second of year of its existence, Industry is aware to a huge extent about the CSR and its applicability but still Government need to take initiatives to create the awareness among the Industries, Professionals and other stake holders so that there should be 0% confusion among the minds and the CSR money can be spend for the betterment of the society and that which has been thought by the Law Makers must have been achieved.
CS Mohit Saluja
Mohit Saluja & Associates
Company Secretary in Practice
2nd Floor, Malhotra Complex, Sehdev Market, Jalandhar
Tags Corporate Law