Presentation On Legal aspect OF CORPORATE SOCIAL RESPONSIBILITY 11-Jan-17
11-Jan-17
SL. No. PARTI TICULARS CULARS PAR ART-A BAC ACKGRO ROUND/ UND/ NEED/ / ORIGIN GIN OF CSR PART-B CSR( ( CORPO PORATE TE SOCIAL IAL RESPO PONSIB IBILITY LITY) ) LAW-20 2013 13 1. Provisions of Companies Act, 2013 2. C.S.R. Committee 3. Annual Reporting of CSR Spend 4. Tax Impact under various types of CSR Activities PART-C IMPLEME MENT NTATI TION ON OF CSR AGEND NDA PART-D CONCL NCLUSIO USIONS NS 11-Jan-17
‘A commitment to improve community well being through discretionary business practices and contributions of corporate resources’. – Philip Kotler and Nancy Lee (2005) Corporate social responsibility Corporate Social Responsibility is the encompasses not only what companies do continuing commitment by business to with their profits, but also how they make them. It goes beyond philanthropy and behave ethically and contribute to compliance and addresses how companies economic development while manage their economic, social, and improving the quality of life of the environmental impacts, as well as their workforce and their families as well as relationships in all key spheres of influence: of the local community and society at the workplace, the marketplace, the supply large” chain, the community, and the public policy realm. Lord Holme and Richard Watts - Harvard University ‘A way companies ‘A multi layered concept manage the business that can be differentiated processes to produce an into four interrelated overall positive impact on aspects – economic, legal, society.’ ethical and philanthropic – Mallen Baker, responsibilities’. Founding Director, – Archie Carroll (1991) Business Respect 11-Jan-17
Asia has Mortality Rate is 53 Indian census maximum per 1,000 that a statistics reveal numbers of newborn baby will die that the sex ratio polluted rivers before reaching age in India slumped five, if subject to age- than anywhere specific mortality rates from 976 girls per else in the of the specified year 1000 boys in 1961 world to 914 in 2011 The unemployment Literacy rates are rate is 82.14% for men and 29.8% estimated to be 65.46% for women population is 8.8% below poverty line In India alone, the Worldwide, infectious single largest cause of diseases such as India ranks last ill health and death waterborne diseases among the world‘s among children is are the number one 20 biggest diarrhea, which kills economies in killer of children nearly half a million terms of air under five years old children each year pollution levels 11-Jan-17
Guru Granth Sahib Quoran States states They ask thee what they should ―He who eats what spend (In charity). Say: Whatever he earns through ye spend that is good, is for honest work and parents and kindred and orphans shares with others, and those in want and for he alone O Nanak wayfarers. And whatever ye do recognises (follows) that is good, -Allah knoweth it the true path in well. life.‖ Bhagvad Gita states Bible states Charity which is given without Do not neglect to consideration of anything in return, do good and to at a sanctioned and holy place and share what you at an astrologically auspicious time, have, for given as a matter of duty to one such sacrifices are qualified; that charity is regarded as pleasing to God. of the nature of goodness. 11-Jan-17
As per Section 135 of the Companies Act 2013 (Applicable from Financial Year 2014-15), every Company(including Private Company) having given particulars during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of 3 or more directors (including one independent director at least, subject to exemptions. Turnover of at least Net profit of Rs. 5 Net worth of at Rs.1,000 crores crores least Rs.500 crores 11-Jan-17
Foreign company One person (i.e. person resident in India authorized to A Private. Company accept on behalf of the (only 2 directors on its company service of notices or Board)- 2 Directors other documents served on the company) and another person shall be nominated by the foreign company Unlisted Company/ Private Company (not required to Other Companies: 3 or appoint Independent more directors, with at Director)- 3 or more least 1 Independent directors without any Director Independent Director 11-Jan-17
Ensure & Monitor Compliance of CSR Formulation and Policy through preparation of recommendation Transparent of CSR Policy to Monitoring Board Mechanism for implementation Recommend the amount Approve the CSR Policy of expenditure and for and disclose ensure that at least two contents of such Policy per cent of the average in its report and also net profits is spent by place it on the the company in every company‘s website Financial year 11-Jan-17
CSR Policy should specify that the corpus would include the following: (i) 2% of the average net profits(Profit before tax) (ii) Any income arising there from, (iii) Surplus arising out of CSR activities. Following should be mentioned in CSR Policy: List of CSR projects/programmes/ Surplus arising out of the CSR activity will not be part of business profits of a company. Also, any surplus activities to be arising out of CSR Activities will be re-directed towards undertaken as specified CSR Activities and not the business of the company. in Schedule VII of the Act Modalities Transparent Expenditure/budget of monitoring for the CSR Activities mechanism execution 11-Jan-17
• The Board shall ensure that the amount to be spent ,in every Financial Year shall be, at least 2% of the Average Net Profit(Profit AMOUNT OF CSR before tax) of the Company made during EXPENDITURE the 3 immediately preceding financial years, in pursuance of its CSR Policy. • Once a company is covered under the provisions of CSR as per sub section (1) of Section 135, the company will have to comply with the rules for three consecutive financial years, APPLICABILITY even if in the subsequent years, these rules do not apply to them. However, any company that ceases to be covered OF CSR under Section 135 of the Act for three consecutive financial years will not be required to comply with the provisions PROVISIONS relating to CSR till such time it meets the criteria specified in sub section (1) of Section 135. 11-Jan-17
ACTIVITI VITIES ES INCLUD UDED ED ACTIVITI VITIES ES EXCLUD UDED ED Approved by the board of directors, and on the Political contribution recommendation of the CSR Committee (must be cited in the CSR Policy) Building Capacity of CSR team (up to 5 percent of Solely for benefit of employees and their CSR expenditure), through institutions with an families established track record of at least three years Contribution to corpus Activities that are in pursuance of normal course of business of a company. Any surplus earned through CSR Activities (or interest earned on corpus funding) will, however, need to be plowed back as additional CSR spend. 11-Jan-17
Schedu dule e VII Activiti vities es- Activities which may be included by companies in their Corporate Social Responsibility Policies: Ensuring Eradicating Promotion of environment extreme education sustainabilit hunger & y poverty Social business Combating human projects such other Reducing child immunodeficiency matters as may be mortality and virus, acquired immune prescribed improving deficiency syndrome, maternal health malaria and other diseases Contributions to Prime Minister Fund or any Employment other fund set up by the enhancing Promoting gender Central Government or vocational skills equality and the State Governments empowering women 11-Jan-17
Overview of projects or Brief outline of the Composition of the programs to be company‘s CSR CSR Committee conducted Policy Prescribed CSR Responsibility statement expenditure - 2% of CSR Committee stating Average net profit of the average net that the implementation of the company for profits of last 3 and monitoring of CSR the last three Financial Years Policy is in compliance financial years with CSR objectives and policy of the company. CSR Policy should be displayed on Disclosure of Reasons of the company not spending the Details of CSR website prescribed CSR spent during the Expenditure financial year 11-Jan-17
Total Revenue Less: Extraordinary income(if included above) Profit from Premium of shares/Debentures 1. Profit from sales of Forfeited shares 2. Profit in terms of capital natures (in terms of undertaking of company or any part of 3. thereof) Profit from the sale of immovable property/fixed assets/any capital nature 4. Any surplus change in carrying amount of an assets or liability recognized in equity 5. reserves Total al Reve venu nue afte ter r extra raord ordinary inary income me Less: Total Expenditure including Operating Expenses (i.e. Raw material expenses, stock adjustments, wages, selling and admin expenses, interest, depreciation) Profit fit before fore Tax Add: if debited in Profit & Loss A/c Income tax and any other tax 1. Compensation, damages or other payments made voluntarily 2. Loss of capital natures including loss on sale of undertaking of company or any part of 3. thereof Any transfer to assets/liabilities revaluation reserves 4. Net Profit 11-Jan-17
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