CSR ACTIVITES UNDER THE COMPANIES ACT, 2013 [2 of 3]

INTRODUCTION

Corporate Social Responsibility (CSR) has emerged as a pivotal aspect of corporate governance, with companies increasingly recognising their role in contributing to societal welfare beyond profit-making endeavours. Under Schedule VII of the Companies Act, 2013, companies are mandated to allocate funds towards CSR activities, thereby addressing various socio-economic and environmental challenges. The breadth of CSR activities encompasses a diverse range of initiatives aimed at fostering sustainable development and social inclusion.

WHO SHOULD BE COMPLIANT?

As per the 2013 Act, companies must establish a CSR committee if, in any financial year, they meet one of the following criteria:

1.     a net worth exceeding rupees five hundred crores, or

2.     turnover surpassing rupees one thousand crores, or

3.     a net profit exceeding rupees five crores.

Rule 3(1) of the 2014 Rules extends this requirement to subsidiary companies of holding companies and foreign companies with branches or project offices in India meeting the same criteria as specified in Section 135(1).

However, Rule 3(2) exempts companies that fail to meet these thresholds for three consecutive financial years from complying with CSR provisions.

CSR ACTIVITIES UNDER SCHEDULE VII

The companies can incorporate the following activities in their CSR policy:

1. eradicating hunger, poverty, and malnutrition, promoting health care including preventive health care and sanitation including contribution to the Swachh Bharat Kosh and making available safe drinking water;

1. promoting education, including special education and vocation training, especially among children, women, the elderly, and the differently abled, and livelihood enhancement projects;

1. promoting gender equality, empowering women, setting up homes and hostels for women and orphans, establishing old age homes, day-care centres, and other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;

1. 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. This includes contributions to the Clean Ganga Fund;

1. protection of national heritage, art and culture including restoration of buildings/sites of historical importance and works of art, setting up public libraries, and promotion and development of traditional arts and handicrafts;

1. measures for the benefit of armed forces veterans, war widows and their dependents. It includes Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents including widows;

1. training to promote rural sports, nationally recognised sports, paralympic sports, and Olympic sports;

1. contribution to the PM's National Relief Fund or PM's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) or any other fund set up by the Central Government for socio-economic development and relief & welfare of the SC, ST other backward classes, minorities, and women;

1. contribution to incubators or research and development projects in the field of science, technology, engineering, and medicine, funded by the Central or State Government or its agencies, or Public Sector Undertaking;

1. contributions to public-funded Universities engaged in conducting research in science, technology, engineering, and medicine aimed at promoting Sustainable Development Goals;

1. rural development projects;

1. slum area development;

1. disaster management, including relief, rehabilitation, and reconstruction activities.

CONCLUSION

CSR activities under Schedule VII offer companies a unique opportunity to align their business interests with societal welfare and environmental stewardship. By investing in CSR initiatives, companies not only fulfil their regulatory obligations but also contribute to the collective effort towards building a more inclusive, equitable, and sustainable future for all. As we navigate the complexities of the modern business landscape, the integration of CSR into corporate strategies will continue to be instrumental in driving positive social change and fostering long-term business success.