Friday, February 28, 2014

CSR Provisions Soon to be Effective

The provisions of the Companies Act, 2013 and the rules thereon pertaining to corporate social responsibility (CSR) have been notified yesterday. They will take effect from April 1, 2014. A copy of the rules as notified is available here.

As for the specific CSR activities, Schedule VII of the Companies Act containing the list of permitted activities has been amended.

While we will have occasion to discuss some of the details in due course, it appears that the rules are fairly prescriptive as to the nature of CSR activities that companies can carry out. Moreover, it has been explicitly stated that political funding by corporates it outside the purview of CSR, and understandably so. Some of the other issues discussed previously continue in the new version as well, including the fact that employee benefits will not be encompassed within CSR.

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.

No comments: