The Indian government has appointed 12-member panel to review the CSR enforcement provisions under the Companies Act. Another focus of the panel is to look after having a centralized scrutiny and prosecution mechanism to deal with violations. The move by the Corporate Affairs Ministry comes little over four years after the Corporate Social Responsibility (CSR) norms came into force on April 1, 2014.
Under the Companies Act, 2013, certain class of profitable entities are required to shell out at least two per cent of their three-year annual average net profit towards CSR activities. In case of non-compliance, reasons have to be furnished by the concerned entities to the ministry.
In recent times, the ministry has come across rising instances of non-compliance with CSR requirement.
Last year, the ministry had sought explanation from many companies as they were found to not have complied with CSR norms.
So much importance is being given to the concept of CSR because this is seen as a bright hope for the development of India. Through CSR activities, corporations can pay back to the society by social welfare, because corporations have to take care of the society and environment within which it works.
A committee on CSR to review “The functioning of CSR enforcement and to recommend a uniform approach for its enforcement” has been constituted, according to a communication from the ministry.
Among others, the panel would revisit the guidelines for enforcement of CSR provisions and basis, including structure of Centralized Scrutiny and Prosecution Mechanism (CSPM).
As per the communication, dated April 4, the panel will revisit “Schedule VII of Companies Act, 2013, on the basis of references received from stakeholders, including ministries and department of centre and states, members of Parliament, member of state legislatures and civil societies”.
The panel will comprise of 12 members and will be headed by Regional Director Manmohan Juneja. Mr. Sanjay Shorey (Joint Director, Legal) and N K Dua (Joint Director, Policy) will also be the members while Seema Rath; Deputy Director (CSR) will be the convener. Representatives from apex bodies of chartered accountants, cost accountants and company secretaries, among others will be part of the panel.
Besides, there will be two sub-committees — legal and technical — that would go into various aspects in relation to compliance with CSR provisions.