Lok Sabha Question No. 6 (STARRED), answered on 2022-07-18
Subject: Monitoring Mechanism for CSR
Ministry: CORPORATE AFFAIRS
Asked by: Vivek Narayan Shejwalkar

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

LOK SABHA STARRED QUESTION NO. 6 ANSWERED ON MONDAY, JULY 18, 2022/ ASHADHA 27, 1944 (SAKA)

## MONITORING MECHANISM FOR CSR QUESTION

*6. SHRI VIVEK NARAYAN SHEJWALKAR:

Will the Minister of CORPORATE AFFAIRS

मंत्री

be pleased to state:

- (a) whether any monitoring mechanism has been put in place to ensure smooth execution of Corporate Social Responsibility (CSR) activities of the profit making companies in the country;
- (b) if so, the details thereof; and
- (c)  whether  any  amount  of  CSR  has  been  used  for  the  improvement  of  health facilities during the Corona crisis and if so, the details thereof?

## ANSWER

THE MINISTER OF FINANCE

AND CORPORATE AFFAIRS                                       (SHRIMATI NIRMALA SITHARAMAN)

वित्त एिं कारपोरेट कार्य मंत्री

(

(a) to (c): A Statement is laid on the Table of the House.

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श्रीमती निमयला सीतारामि )

कारपोरेट कार्य

STATEMENT REFERRED TO IN REPLY TO PART (a) TO (c) OF LOK SABHA STARRED MONITORING MECHANISM

QUESTION NO. *6 FOR 18 TH  JULY, 2022 REGARDING ' FOR CSR ' . (a) & (b): The broad framework for Corporate Social Responsibility (CSR) has been provided through Section 135 of the Companies Act, 2013 ('Act'), Schedule VII of the Act and Companies (CSR Policy) Rules, 2014. Under the Act, CSR is a Board driven  process  and  the  Board  of  the  company  is  empowered  to  plan,  decide, execute and monitor CSR activities  based  on  the  recommendations  of  its  CSR Committee. The CSR framework is disclosure based and CSR mandated companies are required to file details of CSR activities annually in the MCA21 registry. The CSR mandated companies are required to provide additional information in their Profit & Loss Account regarding amount of expenditure incurred on CSR activities and the same is required to be audited by the statutory auditors of the company. Further,  Ministry has  notified  the  Companies  (Auditor's  Report)  Order ,  2020, ('CARO, 2020') applicable from FY 2021 -22 which requires auditors to state details of any unspent CSR amount. The Board of the company is also required to disclose the  CSR  Policy  implemented  by  the  company  in  its  Board  report.  Thus,  the corporate governance framework along with the existing legal provisions such as mandatory  disclosures,  accountability  of  the  CSR  Committee  and  the  Board, provisions for statutory audit of accounts of the company etc. provide adequate mechanisms for monitoring the CSR activities implemented by the companies. The Government monitors the disclosures made by the companies in the MCA 21 portal. Whenever any violation of CSR provisions is reported, action against such non-compliant  Companies  is  initiated  as  per  provisions  of  the  Act  after  due examination  of  records  and  following  due  process  of  law.  Earlier,  CSR  related defaults were compoundable offences. Now, the non-compliance of CSR provisions has been converted as a civil wrong w. e. f. 22 nd  January, 2021. (c): The Ministry vide General Circular no.10/2020 dated 23.03.2020 had clarified that spending on activities related to COVID-19 is an eligible CSR activity. Further, Companies  (CSR  Policy)  Rules,  2014  were  amended  to  enable  companies  to undertake  CSR  activities  in  their  normal  course  of  business  for  undertaking research and development of new vaccine, drugs and medical devices related to

COVID-19 for financial years 2020-21, 2021-22 & 2022-23.

In  addition,  vide  General  Circulars  no.  01/2021,  05/2021  and  09/2021  dated 13.01.2021, 22.04.2021 & 05.05.2021 respectively, the Ministry had also clarified that spending of CSR funds for carrying out awareness campaigns/programmes or

public  outreach  campaigns  on  COVID-19  Vaccination  programme,  setting  up makeshift hospitals and temporary COVID  care facilities, creating health infrastructure for COVID care, establishment of medical oxygen generation and storage  plants,  manufacturing  and  supply  of  Oxygen  concentrators/  ventilators/ cylinders and other medical equipment for countering COVID-19 are eligible CSR activities under item nos. (i) and (xii) of Schedule VII of the Act. were  spent  on  'healthcare  related  activities'

All data related to CSR filed by companies in MCA21 registry is available in public domain at www.csr.gov.in. On the basis of filings made in the MCA21 registry up to 31.03.2022, all CSR eligible companies have spent a cumulative CSR amount of Rs 24,865.46 Crores in FY 2020-21, out of which an amount of Rs. 6,946.75 Crores including  activities  related  to COVID-19.  The  Ministry  does  not  specifically  maintain  CSR  funds  spent  by  the companies for COVID-19 separately.

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