The government has set up a 12-member panel to review the enforcement of CSR provisions under the companies law as well as look at having a centralized scrutiny and prosecution mechanism to deal with violations. The latest move by the Corporate Affairs Ministry, which is implementing the Companies Act, comes little over four years after the Corporate Social Responsibility (CSR) norms came into force on April 1, 2014. 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). It will also look at methodologies for monitoring of compliance by companies with CSR norms for having an effective 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”. Schedule VII pertains to the board list of CSR activities that can be taken up under the Act. The 12-member panel is headed by Regional Director (Western Region) Manmohan Juneja. Other members include Joint Director (Legal) Sanjay Shorey and Joint Director (Policy) N K Dua, while Deputy Director (CSR) Seema Rath 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. 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. As per the official data, 6,286 companies spent Rs 4,719 crore towards various CSR activities in 2016-17. The total number of such projects taken up stood at 11,597.