1. CORPORATE SOCIAL RESPONSIBILITY An overview of the Companies Act, 2013
Gayatri Subramaniam
Indian Institute of Corporate Affairs

2. EVOLUTION OF CSR We are getting here Section 135 Compliance
Investment in social development as part of the Business plan (NVGs)
Good corporate citizenship
Strategic Community investment
Strategic giving linked to business interest
Philanthropy
Passive donations to charities
Pure self interest
Corporate profit

3. FROM CORPORATE RESPONSIBILITY TO CORPORATE SOCIAL RESPONSIBILITY
Compliance to 135
Nation Building
Immediate Community development
Sanitation, education, environment
School for staff children, sanitation in staff colonies etc.
Welfare of staff families
Staff welfare
Occupational safety

4. GOVERNMENT & CSR 16-04-2017 2007 PM’s Ten-Point Social Charter 2009
Voluntary Guidelines on CSR
2010
2011
National Voluntary Guidelines on Social, Environmental and Economic Responsibilities (NVGs)
2012
SEBI mandate on disclosure in the form of Business Responsibility Reports (BRRs) on NVGs for top 100 listed companies
2013
PSE Guidelines
Section 135 of Companies’ Act, mandating CSR spend of 2% profit
DPE Guidelines

5. MILESTONES IN CSR The New Companies Act 2013 18 Dec 2012
Companies Bill 2013 Approved by the Lok Sabha
08 Aug 2013
Companies Bill 2013 approved by the Rajya Sabha
30 Aug
2013
Gazette notification of the New Companies Act 2013
27 Feb
2014
Rules on Section 135 notified on MCA’s Website

6. THE SIZE OF THE CSR SPACE – APPROXIMATELY
16,000 Companies
18,000 Crores Indian Rupees
30,000 Directors of Boards

7. QUALIFYING CRITERIA
Section 135, sub-section 1 of the Companies Act, provides the qualifying criteria;
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 is mandated to constitute a Corporate Social Responsibility Committee of the Board.
Any financial year refers to any of the three preceding financial years. 8

8. COMPOSITION OF CSR COMMITTEE
A Corporate Social Responsibility Committee of the Board consists of three or more directors, out of which at least one director shall be an independent director.
An unlisted public company or a private company covered under Section 135(1) of the Act, which is not required to appoint an independent director, shall have its CSR Committee without such director .

9. COMPOSITION OF CSR COMMITTEE (CONT’D)
A private company with two directors on Board should constitute its CSR Committee with only two directors;
The CSR Committee shall institute a transparent monitoring mechanism for implementation of the CSR projects or programs or activities undertaken by the company.

10. BOARD AND THE COMMITTEE
Role of the Board
Form a CSR Committee
Approve the CSR Policy
Ensure Implementation of CSR activities
Ensure 2% spend
Disclose reasons for not spending
CSR Committee
Three or more directors with at least one independent
Formulate and recommend a CSR policy to the board
Recommend activities and the amount of expenditure to be incurred
Monitor the CSR policy

11. CSR PROJECT/PROGRAMME
Baseline survey
Duration of the Project
Amount allocated to the Project
Amount allocated to the Project in current FY
Start Date / End Date
Monitoring and Documentation
Objective Evaluation

12. CSR PROJECT: IMPLEMENTATION
Directly by the company
Own NGO
Other NGOs (Three years)

13. SCHEDULE VII – CSR THEMATIC AREAS
1. Eradication of extreme hunger and poverty, sanitation, Health
2. Promotion of education, special education and vocational training
3. Gender Equality-Women empowerment + senior citizens
4. Protection of National Heritage, art and culture
5. Benefit of armed force veterans, war widows
6. Ensuring environmental sustainability, ecological balance, wildlife conservation
7. Technology incubators within academic institutions
8. Rural sports, Paralympic and Olympic sports,
9. PM relief funds, Disaster relief work etc.
10. Rural Development projects

14. RULES EFFCETIVE FROM 1st APRIL’2014
Provisions apply to every Indian company including its holding company or subsidiary company;
Surplus arising out of the CSR Projects or programs or activities shall not form part of the business profit of a company;
CSR projects or programs or activities undertaken in India only shall amount to CSR Expenditure.
RULES EFFCETIVE FROM 1st APRIL’2014

15. PROVISIONS for FOREIGN COMPANIES
Section 135 applies to foreign companies having their branches or project offices in India;
Net profit of such companies shall be determined as per the profit and loss account prepared under section 381(1)(a) read with section 198 of the Companies Act, 2013;
CSR Committees of such companies shall comprise of at least two persons of which one shall be as specified under clause (d) of sub- section (1) of section 380 of the Act and another person to be nominated by the foreign company.

16. CSR POLICY
The policy shall include a list of CSR projects or programs which a company plans to undertake falling within the purview of the Schedule VII of the Act, specifying modalities of execution of such projects or programs and implementation schedules for the same;
It will also elaborate the Monitoring process for such projects or programs.

17. CSR EXPENDITURE
CSR expenditure shall include all expenditure including contribution to corpuses of trusts/societies/section 8 companies which are created exclusively for undertaking CSR activities or for purposes directly relatable to a subject covered in Schedule VII;
A company cannot make any contribution to any political party or political purpose.

18. CSR EXPENDITURE
Activities undertaken in pursuance of the normal course of business of the company will not count as CSR;
CSR Projects or programs or activities that benefit only the employees of the company and their families shall not be considered as CSR activities.

19. CSR EXPENDITURE ON CAPACITY BUILDING
For building CSR capacities of their own personnel as well as of those of their implementing agencies, companies may incur expenditure up to 5 per cent of their CSR budgets;
Must be done through institutions with established track records of at least 3 years.

20. COLLABORATION AMONG COMPANIES FOR IMPLEMENTING CSR
A company may also collaborate with other companies for undertaking projects or programs or CSR activities;
Provided CSR Committees of respective companies are in a position to report separately on such projects or programs in accordance with these rules.

21. THE SECTION 135: IMPLEMENTATION PROCESS
Developing a CSR Strategy
Operationalizing the institutional mechanism – team identification & capacity building
Identifying the Implementing Agencies (conducting due diligence, if required)
Project Development – Detailed Project Report (DPR)
Clear identification of CSR Budget
Finalizing agreement with the implementing agency
Documentation, Monitoring (at Board and Sub-board level)
Project Implementation
Project impact assessment
Preparation of reporting format and placement in public domain 1 3 5 2 4
Project approval – insertion of the approved projects in the policy 6 7
Evaluation (Concurrent, Final & preferably Third Party) 8 9 10

22. Let us show that we do care
and together make a difference!! THANK YOU