The government has asked all eligible companies to furnish details about social welfare activities undertaken by them under the Companies law – after finding some discrepancies in CSR spending data submitted by them in their statutory filings. Officials said that the Corporate Affairs Ministry has asked companies to submit details about utilisation of CSR funds after noticing discrepancies in the data.
A random analysis of filings indicated that there are discrepancies in submissions with regard to CSR activities. In some instances, firms have submitted that they do not come under CSR regulations whereas financial data suggest that they do come under it, sources said. In this regard, the Registrar of Companies (RoC) has sought information on CSR works from the firms. The information is being sought by the RoCs to have a clearer picture about compliance with CSR norms, they added.
Under the Companies Act, 2013, every company having a net worth of at least Rs.500 Cr, minimum turnover of Rs.1,000 Cr or a net profit of Rs.5 Cr or more are required to shell out a minimum of 2% of their 3 year average annual net profit towards CSR activities. Such entities are required to constitute a CSR committee of their respective board of directors to formulate and recommend to the board CSR activities that can be taken up by the company. The Act also requires the eligible entities to mention about CSR activities and related spending in the report prepared by their board of directors. And in case of non-spending, the firms need to furnish reasons for the same. While the Corporate Social Responsibility (CSR) regulations came into force from 1 April, 2014, how much money has actually been spent during the first year of implementation (2014-15) is yet to be quantified.
Earlier in March, Corporate Affairs Minister Arun Jaitley had informed the Rajya Sabha that as many as 460 listed firms had disclosed a CSR spend of Rs.6,337.36 Cr in 2014-15.
Additionally, the ministry has amended rules now allowing corporates to carry out CSR activities through non-profit entities and societies set up by governments that do not have a 3 years’ track record in undertaking such projects. The creates a wider choice for Companies in carrying out CSR works.