Companies Act, 2013--Corporate Social Responsibility

Cracking the CSR Code : Compliance, Challenges and Change

CS. Pragya Lalwani

Corporate Social Responsibility (CSR) has emerged as a crucial component of corporate governance in India. The Companies Act, 2013, mandates specific companies to allocate a portion of their profits towards social initiatives. This article provides an overview of the legal provisions, compliance requirements, management of unspent CSR funds, penalties for non-compliance, practical challenges faced by businesses, permitted activities under Schedule VII and key CSR projects such as the Clean Ganga Fund. It aims at assisting companies in ensuring adherence to CSR obligations while making meaningful contributions to society.

1. Introduction

Corporate Social Responsibility (CSR) is no longer a voluntary initiative for large corporations in India; it is an essential framework under the Companies Act, 2013, mandating eligible companies to contribute towards social and environmental development. CSR initiatives promote inclusive growth, ensuring that businesses play an active role in addressing societal challenges such as education, healthcare, environmental sustainability, and rural development.

The Companies Act, 2013 prescribes specific thresholds for CSR applicability and lays down guidelines for compliance. However, while the legal provisions provide a structured framework, companies often face practical hurdles in implementing CSR initiatives effectively.

2. CSR Applicability

CSR provisions apply to companies meeting any of the following criteria in the preceding financial year: