Corporates have their core function or main target of earning
profits. A company is considered an entity distinct from its
members, therefore it is an artificial person in eyes of Law and
Like a distinct person, a corporate or company is also expected to
fulfill its social obligations. Corporate Social Responsibility
(CSR) is a form of social obligation of a Company towards society
at large. Corporates takes a lot from society in the form of
resources for carrying out its functions and earning profits, hence
it should also be able to return to society some of the benefits
The World Business Council for Sustainable Development explains
CSR as continuing commitment by business to behave ethically and
contribute to economic development while improving the quality of
life of the workforce and their families as well as of the local
community and society at large.
Companies in India have been proactive in taking up CSR
initiatives and integrating them in their business processes.
Numbers of Companies are actively engaging themselves in more and
more CSR activities. Introduction of voluntary guidelines by
Ministry of Corporate Affairs on CSR is also an indication of
growing importance of CSR in business environment thesedays.
Further, Companies Bill also contains provisions with respect to
CSR. Therefore, CSR which is considered voluntary on part of
Corporate will soon acquire statutory colours with coming into
effect of Companies Bill, 2011.
CSR and Companies Bill , 2011
Some of the provisions under the Companies Bill, 2011
incorporating clauses relating to CSR are as follows:
Constitution of CSR committee
As per the Companies Bill, 2011, 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 shall constitute a
Corporate Social Responsibility Committee of the Board consisting
of three or more directors, out of which at least one director
shall be an independent director.
Function of CSR committee
a. Formulate and recommend to the Board, a Corporate Social
Responsibility Policy which shall indicate the activities to be
undertaken by the company 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 Corporate Social Responsibility Policy of the
company from time to time.
Every company should spend, in every financial year, at least
two per cent of the average net profits of the company made during
the three immediately preceding financial years, in pursuance of
its Corporate Social Responsibility Policy.
For a developing country like India, investment by corporates in
CSR activities is a requisite. India is faced with problems like
poverty, illiteracy, lack of healthcare etc. These challenges are
still ubiquitous and the government has limited resources to tackle
More and more companies are realizing their responsibility
towards the community and doing their part for the society through
donations and charity events. In fact CSR nowadays has gone beyond
mere charity and donations, and is approached in a more organized
fashion. It has become one of the strategic tools of the companies.
Companies form CSR teams, especially dedicated to formulating
policies, strategies and goals for their CSR programs and set aside
budgets to support them.
Corporates are also executing many CSR initiatives in
partnership with Non-Governmental organizations (NGOS), thereby
taking advantage of the experience and expertise of such NGOs in
tackling specific social problems.
Engaging in various CSR activities is a win-win situation for
both corporate and society. Corporates can save a lot in front of
taxation and also contribute in upliftment of society by indulging
in such CSR activities.
CSR has come a long way in India, from responsive activities to
sustainable initiatives, corporates have included CSR as part of
their practice area.
Today, most of the corporate groups spend some part of their
profit towards society in different ways like Organizing
Medical/Health Camps, providing Educational Scholarship Schemes
etc. This helps in development of community and enhancement of the
reputation of the company. CSR also cultivates a sense of loyalty
and trust amongst the employees in the organizational ethics. It
improves operational efficiency of the company and is often
accompanied by increase in quality and productivity.
Ankit Sukhija is aCompany Secretary
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The Ministry of Corporate Affairs notified on June 5, 2015 that certain provisions of the Companies Act, 2013 shall not apply to private limited companies or shall apply with such exceptions or modifications as directed in the notification.
Whilst trade and barter have existed since early times, the modern practice of forming business relationships through the means of contract has come into existence only since the industrial revolution in the West.
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