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Show Cause Notices To 496 Firms For Non-Compliance With CSR Norms

New Minister of State for Corporate Affairs Arjun Ram Meghwal (Image credit: arjunrammeghwal.com)

New Delhi (November 22, 2016): The Government has issued a show cause notice to 496 companies for not complying with CSR norms and 4,195 companies have not spent a single rupee on CSR activities, Parliament was informed on Tuesday. Companies not finding suitable implementing agency, delay in formation of CSR committee and inability to formulate a well conceived CSR policy, were cited as reasons for not spending.

Under the Companies Act, 2013, certain classes of profitable entities are required to spend at least 2% of their 3 year annual average net profit towards CSR activities. Companies having a turnover of at least Rs 1,000 crore or minimum net worth of Rs 500 crore or net profit of Rs 5 crore or more in a financial year are required to comply with the CSR norms. In case on non spending, the Companies are required to give reasons for the same.

An assessment of CSR expenditure of 7,334 companies for 2014-15 indicates that 4,195 companies did not incur any expenditure on CSR, Minister of State for Corporate Affairs Arjun Ram Meghwal said in a written reply to the Rajya Sabha. Besides, show cause notices have been issued by Registrar of Companies to 496 companies for non-compliance with the CSR norms. Collectively, 3,139 companies have spent a total of Rs 8,803 crore on CSR initiatives. Most of the CSR funds have been spent on education, health care, environment and animal welfare, and rural development activities.