CORPORATE SOCIAL RESPONSIBILITY

PROMOTING WELFARE
INITIATIVES

1/7/2019
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Corporate Governance & Corporate Social
Responsibility (CSR) are the two sides of the
same coin.

Good Governance from corporates are

expected towards its stakeholders since it
receives from the society & so has to give
back in return to the society in the form of
good governance.

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 CSR is essentially whereby Corporates integrate social &
environmental concerns in their business operations on a
voluntary basis.

 Expectations of the stakeholders of the corporates & its

role towards the environment, social & economic
development organization.

 CSR business giving back to the society.

 Evolution of CSR ;
- New expectations from citizens, consumers, Government,
investors on account of globalization.
- Environmental concerns
- Influence of media & Information technology towards
transparency
- Social concerns influencing the investment decisions.

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EVOLUTION OF CSR
We are here

Section 135 Compliance

Investment in social development

Good corporate
as part of the Business plan
citizenship

Strategic Community Strategic giving linked to

investment Business interest

Philanthropy Passive donations to charities

Pure self interest

Corporate profit
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 Protecting & Promoting Stakeholders interest;
Consumers- good quality products & fair prices,
Workers- fair wages & without exploitation, Shareholders-
dividends & good return on investments, managers- good salary
& challenging jobs.
“Custodians of public welfare”

 Social Concerns & Promotion of Common Welfare

Programmes.
Corporates promote programmes concerning poor, social issues-
drug addiction, smoking etc., Medical Camps awareness
programmes.

 Act of Philanthropy.
Social Responsibility is also Philanthropy. Tsunami victims,
Gujarat Earthquake.

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 Good Corporate governance itself is a Social
Responsibility.

Corporate democracy, professional management &

maximization of long term shareholder value, increasing
foreign funds flow has increased the awareness of
Corporate Governance thereby the growth of CSR.

 Corporates rendering Social Services.

Supplementing the requirements of the State &
Government. Tatas thru education of social sciences,
Birlas- Science thru planetariums. Companies promoting
Sports.

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 Sponsoring Social & Charitable causes.
Apart form contributing the industrial growth they have
contributed to the charitable causes. Dr Reddys-Naandi
Foundation, EMRI.

 Corporates to supplement state efforts.

Corporates can run schools provide quality education. If
each of the 2 lakh corporates can manage three schools in
their areas or adopted villages, then the entire country
can be covered.
Family Planning clinics, hospitals, campaigns against
alcoholism, drug abuse. Sulabh International.

 Social Responsibility also lies in abiding the rules &

regulations.
Demands confirmity with the accepted norms &
interpretations of the laws dealing with business activity.

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 Ensuring Ecological Balance

Corporates to reduce pollution.

 Focusing on human element.

Improve the quality of work life, reduce hazards in

workplace, equality in employment opportunities.
Empowerment.

Interpretations of the laws dealing with business activity.

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 2007 2009 2010 2011 2012 2013
• PM’s Ten- • Voluntary • National • SEBI mandate• PSE
Point Guidelines • DPE Voluntary on disclosure Guidelines
Social on CSR Guideli Guidelines in the form of • Section 135
Charter nes on Social, Business of
Environme Responsibility Companies’
ntal and Reports Act,
Economic (BRRs) on mandating
Responsibi NVGs for top CSR spend of
lities 100 listed 2% profit
(NVGs) companies

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 The New Companies Act 2013

30 Aug 27 Feb
18 Dec 2012 08 Aug 2013
2013 2014

• Companies • Companies • Gazette • Rules on

Bill 2013 Bill 2013 notification of Section 135
Approved by approved by the New notified on
the Lok Sabha the Rajya Companies MCA’s Website
Sabha Act 2013

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 CORPORATE SOCIAL RESPONSIBILITY
(SECTION - 135)

Every Company having net worth of rupees five hundred crore or

more, or turnover of rupees one thousand crore or more or a net
profit of rupees five crore or more during any financial year to
constitute a Corporate Social Responsibility Committee of the
Board consisting of three or more directors, out of which at least
one director shall be an independent director

The Board’s report to disclose the composition of the Corporate

Social Responsibility Committee

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 CORPORATE SOCIAL RESPONSIBILITY
(SECTION - 135)

Committee shall formulate and recommend to the Board, a CSR Policy

indicating the activity or activities to be undertaken by the Company as
specified in Schedule VII of the Law

Recommend the amount of expenditure to be incurred on the activities above

and

Monitor the Corporate Social Responsibility Policy of the Company from time to
time

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 CORPORATE SOCIAL RESPONSIBILITY
(SECTION 135)

Based on recommendations from CSR Committee, Board of such Company

to approve the CSR Policy for the Company and disclose contents of such
Policy in its report and on the Company’s website

Every year in the Board’s Report, details about the policy developed and
implemented by the Company on CSR initiatives taken during the year to be
included

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 CORPORATE SOCIAL RESPONSIBILITY
(SECTION 135)

Board shall ensure that at least two per cent of average net profits of the Company
made during three immediately preceding financial years is spent in every financial
year on such policy

For spending the amount earmarked for CSR activities the Company shall give
preference to the local area and areas around it where it operates.

If a Company fails to provide or spend such amount, the Board to specify reasons
for not spending the amount in its report

Companies require to comply with CSR shall give additional Information by way of
notes to the Statement of Profit and Loss regarding aggregate expenditure incurred
on corporate social responsibility activities.

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 Activities covered under amended Schedule VII of
the New Companies Act, 2013

Eradicating hunger, poverty and malnutrition, promoting preventive

health care & sanitation Including contribution to the Swach Bharat Kosh set
up by the Central Government for the promotion of sanitation and making available
safe drinking water;

Promoting education, inc luding special education and employment

enhancing vocation skills specially among children, women, elderly and the
differently abled and livelihood enhancement projects;

Promoting gender equality, empowering women, setting up homes

and hostels for women and orphans; setting up old age homes, day care
centers and such other facilities for senior citizens and measures for reducing
inequalities faced by socially and economically backward groups;

Ensuring environmental sustainability, ecological balance, protection

of flora and fauna, animal welfare, agro-forestry, conservation of natural
resources and maintaining quality of soil, air and water including contribution to
the Clean Ganga Fund set up by the Central Government for Rejuvenation of river
Ganga;

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 Activities covered under amended Schedule VII of
the New Companies Act, 2013

Protection of national heritage, art and culture including restoration of

buildings and sites of historical importance and works of art; setting up public
libraries; promotion and development of traditional and handicrafts;

Measures for the benefit of armed forces veterans, war widows and
their dependents;

Training to promote rural sports, nationally recognized sports, Para

Olympic sports and Olympic sports;

Contribution to the Prime Minister's National Relief Fund or any other

fund set up by the Central Government for socio-economic development and relief
and welfare of the SC/ST/OBC, minorities & women;

Contributions of funds provided to technology incubators located within

academic institutions which are approved by the Central Government

Rural Development Projects

Slum Area Development

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 CORPORATE SOCIAL RESPONSIBILITY

As per the CSR rules

•Net Profit: defined as net profit before tax as per books of accounts and does
not include profits from branches outside India & dividend received .

 CSR Policy of the company to include:

 Specify the projects and programmes that are to be undertaken.

 Prepare a list of CSR projects/programmes which a company plans to

undertake during the implementation year , specifying modalities of
execution in the areas/sectors chosen and implementation schedules for
the same.

 CSR projects/programmes of a company may also focus on integrating

business models with social and environmental priorities and processes in
order to create shared value.

 CSR Policy of the company should provide that surplus arising out of the
CSR activity will not be part of business profits of a company

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CORPORATE SOCIAL RESPONSIBILITY

 CSR Policy would specify that the corpus would include the following:.
a. 2% of the average net profits, b. any income arising there from
c. surplus arising out of CSR activities

 2% CSR to be computed as 2% of average net profits made by company

during every block of 3 years

 Format prescribed for Annual Report in CSR Initiatives to be included in

the Board report

 CSR Committee to prepare transparent monitoring mechanism for

implementation

 CSR activities to be within India only

 CSR activities not to benefit only the employees of the company

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CORPORATE SOCIAL RESPONSIBILITY

 Holding & Subsidiary Companies, foreign companies having their branch

office in India to comply with the provisions. (Networth/Turnover/Profits
of the Indian component for computation)

 Companies ceasing to meet the threshold criteria need not comply.

 CSR Activities can be done though a registered trust/society/Sec 8

Company .

 It may jointly collaborate with other Companies in such a way that each
of the companies may report separately, the activities and the quantum
of funds spent.

 Capacity building and training for CSR personnel can be done provided
the expenditure is not more than 5% of the total expenditure.

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CORPORATE SOCIAL RESPONSIBILITY

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CORPORATE SOCIAL RESPONSIBILITY

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 List of Companies who are required to make CSR contribution

Amount in INR Crores

S.No. Name of Company CSR Spend (2015-16) CSR Spend (2016-17)

1 Reliance Industries Ltd 408.86 659.20

2 Oil & Natural Gas Corpn Ltd 420.99 526.00 (282.01 28.01.18)

3 State Bank of India (1%) 143.90 109.82

4 Tata Consultancy Services Ltd 208.88 379.71

5 NTPC Ltd 180.36 277.81

6 Infosys Ltd 160.19 289.44

7 Bharti Airtel Ltd 152.49

8 Coal India Ltd 150.37 489.61

9 ICICI Bank Ltd 132.95 182.50

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 CYNOSURE TO ALL EYES

As per the analysis of the companies listed on Bombay stock exchange it is

found that :

Average net profit of three

CSR spending which shall be 2%
financial years of these
of such average net profits
companies amounts:
amounts:

Approx INR 3,90,000 crore Approx INR 7800 crore

During the last two years Rs18,000 Crores spent on CSR

 IMPACT OF CHANGE

Quality of functioning of the board will increase

Beginning of new era of corporate Governance

Enhanced responsibility of top management

Increase in trust of investors and stakeholders

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