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Indian Inc. welcomes move to decriminalise CSR violations

Post by Admin,Aug 23,2019.
News

Finance Minister has announced that corporate social responsibility (CSR) violations would not be treated as criminal offences and would instead be a civil liability.

  • The imprisonment of up to 3 years for officials of companies that fail to comply with the specified corporate social responsibility (CSR) expenditure has been rolled back.
  • Recently, Injeti Srinivas panel had been set up to study CSR expenditure.
  • Implications of decriminalisation of CSR Violations:
    • It will allow the corporations to think and employ their CSR funds in an effective way.
    • Freedom to decide and choose the field of CSR related work for corporations.
  • Recently, Parliament passed amendments to the Companies Act, 2013 which includes:
    • Unspent CSR funds by companies should be transferred into an escrow account called Unspent Corporate Social Responsibility Account.
    • The transferred funds needs to be utilised within three years of transfer.
    • Any unspent annual CSR funds must be transferred to one of the funds under Schedule 7 of the Companies Act like Prime Minister’s Relief Fund within six months of the financial-year end.
  • Corporate Social Responsibility
    • Under the Companies Act, 2013, certain classes of profitable entities are required to spend at least two per cent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) in a particular financial year.