Tag Archives: Corporate Social Responsibility

RETROSPECTIVE CSR


Indian laws are interesting phenomena incrementally so in recent years. It is like the king’s wishes. If king pronounces a desire it will be treated as law and will of God. Procedure to convert that desire formally to the law may be complied with in a due course. Any donation made by a company till 26th May 2020 was not legally a CSR contribution except under ages-old pre-democracy principle of king’s wishes. Now, due course of law-making granted king’s wishes its due legal status retrospectively.

Schedule VII of the Companies Act, 2013 which list out items which might be considered as CSR may be amended without parliamentary node by way of Notification issued by concerned Joint Sectary of the Ministry of Corporate Affairs. Practically it requires official approval from concern Minister. Mere wishes of the Minister or even of the whole cabinet are not enough to change a legal position.

In the present case, Prime Minister announced a new but controversial fund almost parallel to existing and well settled “Prime Minister’s National Relief Fund”. New fund is named as the “Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)”.

The major difference in both PM funds is the audit – previous one is to be audited by a constitutional authority – Comptroller and Auditor General of Indian (CAG) which place its audit report to Public through the Parliament of India – called as the temple of Indian Democracy by the present prime minister. On the other hand, newer one is to be audited by a Chartered Accountant firm of choice of the fund and the audit report shall largely be a private affair of the fund. Hopefully, the second one shall be made public under federal transparency law called the Right of Information Act, 2005. However, nothing is clear as of now.

As soon as Prime Minister of India announced this Fund and requested contribution to this fund as part of Corporate Social Responsibility, money starts pouring into this fund. But where was the law? No due diligence was made either by the Government at the time of acceptance of the Fund as CSR nor by contributors. India particularly Corporate India has a long history of pleasing the ruling king then the compliance of the law. This was one fit case.

Soon, auditors of the contributing companies start raising queries. A national but silent whistle was blowing which was a wakeup call for the Government.

Now the notification read as under:

  1. (the number is actually missing, a familiar typo) In Schedule VII, item (viii), after the words “Prime Minister’s National Relief Fund”, the words “or Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)” shall be inserted.

  2. This notification shall be deemed to have come into force on 28th March 2020.

What it actually convey? No company contributing to the fund since 28th March 2020 till 26th May 2020 is good in legal interpretation. These companies receive no proper legal advice despite hiring big law firms. They actually do not care about the written law as they understand and believe the king’s wishes are law after all.

No, I have no issue with the king’s wishes as long as it gives a positive result to the society and the Nation. Read paragraphs hereinabove in a lighter tone and just for legal understanding only. We all know this was actually a hard time for Ministers and Secretaries working on various relief packages. It was appreciable work when a good number of government officers was working from home.

Take inspiration and stay at home as far as possible. Work from Home is a buzz word.

Aishwarya Mohan Gahrana

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AMENDMENT: Administration of CSR


In a post earlier here, we discussed provisions of Section 135 read with rule 4 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 regarding Administration of Corporate Social Responsibility Policy. Sub – rule (2) of rule 4 allow board of directors of a company to choose among various options, a better option to administer the CSR Policy. This rule 4(2) was slightly amended by the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2015. We discussed those amendment rules earlier here.

Now, a gazetted notification published on 23rd May 2016 in Official Gazette of India, which came into force from same date; amend sub – rule (2) of rule 4.

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Reflection of Political Brotherhood in Law


When followers of two major Indian Political parties are using abusive language for mothers and others of opponent, their “leaders united” is working for their brotherhood causes silently, continuously and legally. One of the most popular narrative from both political side on social media claims, media do not show “their” truth. Here, we will discuss one aspect of this year’s budget unreported in conventional media.

We have discussed two year earlier here on 31st March 2014 Foreign Donation to political parties.

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MAJOR RECOMMENDATIONS OF CSR COMMITTEE


The High level Committee constituted by Ministry of Corporate Affairs to suggest measures for improved monitoring of implementation of Corporate Social Responsibility Policies by the companies under Section 135 of the Companies Act, 2013 has submitted its Report to the Government. A copy of report is available here.

We will summarily discuss recommendations of the committee in this post.

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CSR Policy; Publication and Reporting


CSR policy of Indian companies may have more similarities than any other thing. Section 135 read with Schedule VII of the companies Act 2013 decide four corner of CSR policy of Indian companies, which is guided by and supplementary to development vision of Government of India.

Corporate Social Responsibility committee is primary body to formulate and recommend the CSR policy and expenditure thereon. The committee also has to monitor CSR policy implementation and logically expenditure thereon. The Board of a company may approve the policy and budget allocation for different aspect of CSR initiatives.

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CSR Administration in India


In my recent post on CSR last week, I discussed definition and scope of Corporate Social Responsibility in India after recently notified Rules. Now, I will discuss administration of Corporate Social Responsibility in India.

The Corporate Social Responsibility Committee of the Board of the Company is responsible for administration of Corporate Social Responsibility of the company. The committee shall consist of three or more directors, out of which one shall be an independent director. This provision is equally applicable to all companies including private or small companies.

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Applicability of CSR Law


Newly enacted CSR law is not applicable to all companies. Sub – Section (1) of Section 135 is applicable to all companies; subject to limitation based on its net worth, turnover and net profit. These threshold limits are:

  1. Net worth rupees five hundred crore or more (Rs. 500,00,00,000/-) or rupees five arab
  2. Turnover rupees one thousand crore or more (Rs. 10,00,00,00,000/-) or rupees ten arab
  3. Net Profit rupees five crore of more (Rs. 5,00,00,000/-)

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Defining CSR in India


I discussed Corporate Social Responsibility here, when there was a pending Bill. Now, we have a full fledged corporate social responsibility law in place. Section 135 of the companies Act, 2013, redrafted Schedule VII and the Companies (Corporate Social Responsibility Policy) Rules 2014 will be effective from 1st April 2014. I agree with V. Umakanth  in India CorpLaw say, April 1 this year would mark a new era in corporate law and governance in India with companies being required to comply with the quasi-mandatory obligations regarding CSR, an approach that is fairly unique in the global context.

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Quotes from Companies Bill debate in Rajya Sabha


UPDATE: on 30th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

For every new law, legislative intent, which show it in debates taken place in Parliament, become important. These debates offer a guide while drafting subordinate legislation. There are many questions about future rules and regulations. I, here, compiled some important quotes from this debates from Rajya Sabha.[i][ii][iii]

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NON – EXISTENT INDIAN


Every mainstream Indian have at least one document who can serve proof of his identity and address. It may be your ration card, voter identity card, driving license or high-profile passport. These documents are your key to gain entry to any place, get reservation in train, open bank accounts, secure phone connection, and even to claim compensation in case of misfortune like accident or death.

We may have multiple identities, true and false identities as government always claim about false ration cards.

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Corporate Social Responsibility under Companies Act 2013


UPDATE: on 30th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

The provision related to Corporate Social Responsibility under present Clause  Section 135 of Companies Bill 2012 Act 2013 applies to all companies; listed, unlisted, public, private, one – person subject to limitation based on its net worth, turnover and net profit. These threshold limits are:

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BOARD COMMITTEES IN COMPANIES ACT 2013


UPDATE: on 30th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).

Delegation of Power is buzz word in this Companies Bill 2012. This delegation is not only from legislature to Executive but also from Board of Directors to its committees. Committees are not new to Indian Corporate Jurisprudence. Audit Committee was introduced in the present Companies Act, 1956 twelve years ago in year 2000. Schedule XII also has Remuneration committee.

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(UN)HAPPY MAY DAY


International Workers Day is just another holiday for socialist and bad memories for capitalists; no care for labours – labour of unorganised sector which constitute majority of Indian Labour.

Unorganised labour and stray dogs are comparable – they should job (bark) when work – pressure come (thief) come and get some stale food thrown to them. They have no owner, brand, organisation, identity, address, region, religion, caste, or life. They are not stakeholders for corporate governance events and not responsibility for responsible business

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SOCIAL ACTION WITH SATISFACTION AND ENJOYMENT OF ROLLER COASTER RIDE


My early childhood memories start with remembrance of my late grandfather last days. He lived his whole life as widower, father, government executive and devoted religious person. I recall my very few incidents of interactions with him. Once, I gifted my broken toy to one fellow child and my grandfather told me that gift of knowledge and life are a real gift. After few months, on my 5th birthday (as per Vikrimi calendar) he died and I never understood his words, particularly gift of life.

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CONFLICT OF INTERESTS AMONG STAKEHOLDERS IN 2G ALLOCATIONS


There is a clear conflict of interest among promoters, shareholders and other stakeholders of company. The conflict of public shareholders and stakeholders put them in very interesting position.

In the recent cases on 2G scam in India, the government often quoted the cost-effective services to end-user of these service and product as one reason of allocation of resources at such cheap prices. Ministers claim that at CAG suggested prices of the spectrum, call rates would be higher than present rates and become unaffordable to most of the users. Sometimes, it is also suggested that present information revolution may not be happened in India if spectrum allocation were happened according to CAG suggestions.

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SOCIAL ENVIRONMENT FOR INNOVATIVE PROFESSIONISM DRIVEN BY TECHNOLOGY AND REGULATORY DEVELOPMENT


In last 20 years after initiation of economic reforms, India particularly corporate India has moved far ahead to start a new flight towards untouched horizons. We are surviving in a time of dynamic transformations through technological advancement, regulatory rationalisation, progressive professionalism, democratic transformation and sustainable development in our society. In recent developments, transformation of leadership of democratic institutions toward participatory solidarity of all societal stakeholders is evident. There are evidences of many streams of thought and developments in society but there are many new developments, whose time is just knocking the door. Our corporate environment is not left out but is part and parcel of this silent revolution. These transformations in our society are bound to affect all vistas of our life and corporate sector as well. We are very fortunate to be a part of this transformation and we have tremendous opportunity to be a carrier of this transformation. We should understand this revolutionary time and keep pace.

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CSR : Company Secretarial Responsibility


In one programme on Corporate Social Responsibility organised by some Chamber, one renowned Company Secretary claim that Corporate Social Responsibilities are primary responsibility of a Company Secretary. Within no time, some other members negated this fresh liability with “we have enough” attitude.

The basis definition of CSR says “doing business responsibly”.

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Introducing: AishMGhrana Governance Professional


The Institute of Company Secretaries of India has its Continuing willingness to present itself as a world leader as professional body of Corporate Governance professionals. This is a welcome transformation of Company Secretary from a mere clerk to Corporate Governance professional. The ICSI said as a member of CSIA it will ask the World Trade Organization (WTO) to include corporate governance and related areas in its mode of business classification.

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