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Dr. K K Upadhyay Head – CSR

CSR provisions in The Companies Bill, 2012. Dr. K K Upadhyay Head – CSR. January 2013. THE COMPANIES BILL 2012.

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Dr. K K Upadhyay Head – CSR

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  1. CSR provisionsin The Companies Bill, 2012 Dr. K K Upadhyay Head – CSR January 2013

  2. THE COMPANIES BILL 2012 Former Corporate Affairs Minister, Mr Veerappa Moily introduced the Companies Bill, 2011 on 14th December, 2011 in Parliament Lok Sabha. The Bill was cleared by the Cabinet on November 24, 2011. On 18th Dec 2012 the Bill Amendments was presented by Mr. Sachin Pilot, the current Minster of Corporate Affairs, at the Lok Sabha and got it approved.

  3. THE COMPANIES BILL 2012 • The Companies Bill 2012 replaces the Companies Act 1956 • Lok Sabha passed it in Winter session - December 18, 2012 • Rajya Sabha likely to pass it during Budget Session-February • 2013 • After Rajya Sabha passes the Bill, the assent of the President • of India and the Bill‘s publication in the Official Gazette will • be necessary before the Bill becomes as Act most likely from • April 1, 2013 • The New Companies Bill, 2012 have 29 Chapters, 407 Clauses • (Sections) & 7 Schedules

  4. CSR provisions in The Companies Bill, 2012 • Corporate Social Responsibility (CSR) has for the first time been recognized in • the Company Law. • Clause 135 (under Chapter IX – Accounts of Companies) of the Companies Bill • 2012 deals with Corporate Social Responsibility. • Clause 135 contains 5 sub-clauses with one Explanation. • Schedule VII of the Companies Bill 2012 lists out the CSR activities. • This is the first time where a legal provision is introduced for Corporate Social Responsibility.

  5. CLAUSE 135 : Corporate Social Responsibility • Who must comply? • Every Company registered under the companies law or any previous laws (Section 1) If (Section-135): • Net worth of rupees 500 crore or more or • Turnover of rupees 1000 crore or more or • Net profit of rupees 5 crore or more during any financial year • Who will be held accountable? • The company will constitute a CSR Committee of the board • members consisting of three or more directors • At least one committee member shall be an independent director

  6. CLAUSE 135 : Corporate Social Responsibility • What will the CSR Committee do? • 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 • Recommend the amount of expenditure to be incurred on the activities • Monitor the Corporate Social Responsibility Policy of the company from • time to time

  7. CLAUSE 135 : Corporate Social Responsibility • What will be the role of the Board of Directors? • Review the recommendations made by the CSR Committee • Approve the CSR Policy for the company • Disclose contents of the Policy in the company's report/website • Shall ensure that the company spends in every financial year, at least two per • cent of the average net profits • How much will a company be required to spend on CSR? • At least 2% of its average net profit made during the three immediately • preceding financial years

  8. CLAUSE 135 : Corporate Social Responsibility • What are the activities your company can undertake? • According to Schedule VII, Activities – as a Project Mode, which may be included by companies in their Corporate Social Responsibility Policies are: • Eradicating hunger and poverty • Promotion of education • Promoting gender equality and empowering women • Health - reducing child mortality, improving maternal health, combating HIV, AIDS, malaria • Employment enhancing vocational skills • Contribution to PM's fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women • Ensuring environmental sustainability • Social business projects • Such other matters as may be prescribed

  9. CLAUSE 135 : Corporate Social Responsibility • What does a company need to disclose in the Annual Report? • The Boards financial report under sub-section (3) of section • 134, shall disclose the composition of CSR committee, CSR • policy and initiatives • Amount of expenditure incurred on Corporate Social Responsibility activities • Valid reasons in case of failure to spend the earmarked CSR budget

  10. What is likely in the future • In Budget 2013 is likely to allow some tax-deduction /benefits to • companies who spend money for CSR, thus making it attractive for the • companies to spend money for CSR. • An estimated 2,500 companies fall into this “mandatory” CSR-reporting • category. • CSR activities in the first year would be between rupees 9,000 crore and • rupees 10,000 crore spent in social welfare.

  11. Thank You For further details: Dr. KK Upadhyay, Head, FICCI Aditya Birla CSR Centre for Excellence FICCI Federation House, Tansen Marg, New Delhi-110001, India Email id : kshemendra.upadhyay@ficci.com

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