New Delhi (February 7, 2017): Show cause notices have been issued to 536 firms for non-compliance with CSR norms under the companies law, the Government said today.
As per the Companies Act, 2013, a certain class of profitable companies are required to spend at least 2% of their 3 year annual average net profit towards CSR activities in a financial year. The mandate came into effect on April 1, 2014. In case of non-spending, the concerned company has to provide an explanation to the Ministry.
“Show cause notices have been issued by Registrars of Companies to 536 companies for non-compliance of Section 135 read with Section 134 (3) of the Companies Act, 2013,” the Minister of State for Corporate Affairs Arjun Ram Meghwal said in a written reply to the Rajya Sabha.
In the last financial year, a total of 5,097 companies invested in a CSR expenditure of Rs 9,822.30 crore. And as many as 12,431 companies together shelled out more than Rs 18,625 crore towards social welfare activities in the last two financial years. The figures are based on the number of companies for which data has been compiled by the Ministry.
To a query on whether there has been any structured study about the impact of the CSR norms, the Minister replied in the negative.
Companies mandated to spend on CSR as per the Companies Act also have to constitute a CSR committee of the respective board of directors who are supposed to formulate and recommend to the board CSR activities that can be taken up by the company.