Clarification on Corporate Social Responsibility (CSR) for COVID-19 & FAQs
Corporate Social Responsibility (CSR)
Introduction:
Corporate
Social Responsibility (“CSR”) means the responsibilities of the Corporates
towards the society and environment and it becomes their commitment to look
after the society and environment in which they are flourishing. It is dealt under
Section 135 of the Companies Act, 2013 read with Companies (Corporate Social
Responsibility Policy) Rules, 2019.
Section
135 of Companies Act 2013:
(1)
Every Company (public, private,
holding, subsidiary and foreign companies) falls into any of three criteria
below given in the immediately preceding Financial Year:
- net worth of Rs. 500 (rupees five hundred) crore or more, or
- turnover of rupees Rs. 1000 (one thousand) crore or more or
- a net profit of Rs. 5 (rupees five) crore or more
Shall constitute
a CSR Committee of the Board consisting of 3 (three)
or more directors, out of which at least one director shall be an independent director.
Provided where a Company is not required to appoint an
independent director under section 149(4), it shall have two or more directors in its
CSR Committee.
(2)
The Board's report under section 134(3) shall disclose the composition
of the CSR Committee.
(3)
The Corporate Social Responsibility (CSR) Committee shall,—
(a) formulate and recommend to the Board, a
Corporate Social Responsibility Policy which shall indicate the activities to
be undertaken by the company in the areas or subject as specified in Schedule VII;
(b) recommend the amount of expenditure to
be incurred on the activities referred to in clause (a); and
(c) monitor the CSR Policy of the Company from time to time.
(4)
The Board of every company referred to in sub-section (1) shall,—
(a) Approve the CSR Policy for the Company and disclose contents of such Policy in its report after
taking into account the recommendations made by the CSR Committee, and also place it on the company's website, if any, shall be as per annexure
attached to the Companies(CSR Policy) Rules, 2014;
and
(b) Ensure that the activities as are included in
Corporate Social Responsibility Policy of the Company are undertaken by the
company.
(5)
The Board of every Company referred to under section 135(1) shall ensure that the Company
spends at least 2 % (two percent.) of
the average net profits of the Company made during the three immediately
preceding financial years, in pursuance of its CSR Policy in every financial year:
Provided
that the Company shall give preference to the
local area and areas around it where it operates, for spending the amount
earmarked for CSR activities:
Provided
further that if the company fails to spend such amount,
the Board shall, in its report made under clause (o) of sub-section (3) of
section 134, specify the reasons for not spending the amount.
recent Clarification on spending of CSR funds for COVID-19
In
this pandemic situation of Coronavirus (COVID-19), the Ministry of Corporate
Affairs (MCA) issued a General circular (General circular no. 10/2020 dated 23rd
March 2020) issued a clarification on the spending of CSR funds for COVID-19.
Further, the Government of India vide Office Memorandum dated 28th
March 2020 has set up the Prime Minister’s Citizen Assistance and Relief in
Emergency Situations Fund’ (PM CARES Fund) with the primary objective of
dealing with any kind of emergency or distress situation such as that posed by
COVID 19 pandemic. Accordingly, it is clarified that any contribution made to
the PM CARES Fund shall qualify as
CSR expenditure under the Companies
Act, 2013.
The
Central Government in its General circular for Clarification on the spending of CSR
funds for COVID-19 dated 23rd March 2020 clarified that:
"Keeping in view of the spread of novel coronavirus (COVID-19) in India, its declaration as pandemic by the World health Organization (WHO), and the decision of Government of India to treat this as a notified disaster, it is hereby clarified that spending of CSR Funds for COVID-19 is eligible CSR activity.
The Funds
maybe spent on various activities related to COVID-19 under item nos. (I) and (XII) of schedule VII relating to the promotion of health care, including preventive health care and sanitation and
disaster management."
Hence, it is clarified that any
contribution made to PM-CARES Fund will qualify as Corporate Social
Responsibility (CSR) expenditure under the Companies Act, 2013.
Frequently Asked Questions
(FAQs) on CSR:
Further,
Ministry of Corporate Affairs has issued further clarification by way of Frequently
Asked Questions (FAQs) in General Circular No. 15 /2020 dated on 10th
April 2020 which helps clarify these concerns regarding the deployment of CSR
funds for COVID-19 relief.
The
contributions made towards the PM CARES fund shall be covered under CSR, while
funds which are given to Chief Minister's Relief Fund or State Relief Fund for
COVID-19 shall
not qualify as admissible CSR
expenditure.
However, the notification adds that
contributions made to the State Disaster
Management Authority to combat COVID-19 shall qualify as CSR expenditure
under item no (xii) of Schedule VII.
- Contribution of PM Cares Fund;
- Contribution to the State Disaster Management Authority;
- Spending of CSR funds for COVID-19 related activities under items no. (i) to (xii) of the Schedule VII of the Act;
- Ex-gratia payment to temporary/casual workers/daily wage workers that is over and above the disbursement of actual wages as a one-time exception provided there is an explicit declaration to that effect by the Board of the company, which is duly certified by the statutory auditor.
- Contribution to Chief Minister’s Relief Funds or State Relief Fund
for COVID-19;
- Payment of salary/wages to employees and workers including contract
labor during the lockdown period;
- Payment of wages made to temporary/casual/daily wage workers during
the lockdown period.
Further, In an effort to mobilize
greater CSR funding to combat the coronavirus, the Tamil Nadu
government has announced that all contributions made to the Chief Minister’s
Public Relief Fund (CMPRF) towards efforts to combat COVID-19 will be allocated
to the Tamil Nadu State Disaster Management Authority.
**SCHEDULE
VII
Activities which may be included by companies in their CSR Policies Activities relating to:—
(i) Eradicating hunger, poverty and malnutrition, promoting health care including
preventinve health care and
sanitation including contribution to the
Swach Bharat Kosh set-up by the Central Government for the promotion of
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, daycare centers 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 the quality of
soil, air, and water including contribution to the
Clean Ganga Fund set-up by the Central Government for rejuvenation of river
Ganga].
(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 art and
handicrafts;
(vi) measures for the benefit of armed forces veterans,
war widows and their dependents;
(vii)
training to promote rural sports,
nationally recognized sports, paralympic sports, and Olympic sports
(viii) contribution to the PM’s national relief fund
or any other fund set up by the central govt. for socio-economic
development and relief and welfare of the scheduled caste, tribes, other
backward classes, minorities, and women;
(ix) Contribution to incubators funded by Central
Government or State Government or any agency or Public Sector Undertaking of
Central Government or State Government, and contributions to public-funded
Universities, Indian Institute of Technology (IITs), National Laboratories and
Autonomous Bodies (established under the auspices of Indian Council of
Agricultural Research (ICAR), Indian Council of Medical Research (ICMR),
Council of Scientific and Industrial Research (CSIR), Department of Atomic
Energy (DAE), Defence Research and Development Organisation (DRDO), [Department
of Biotechnology (DBT)], Department of Science and Technology (DST),
Ministry of Electronics and Information Technology) engaged in conducting
research in science, technology, engineering and medicine aimed at promoting
Sustainable Development Goals (SDGs).]
(x) rural development projects]
(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.]
(xii) disaster
management, including relief, rehabilitation, and reconstruction activities.
Mind-blowing
ReplyDeleteVery excellent bro..
ReplyDeleteI value your feedback. Please feel free to comment.
ReplyDelete