Lok Sabha Question No. 2 (STARRED), answered on 2022-07-18
Subject: Study on Impact of CSR
Ministry: CORPORATE AFFAIRS
Asked by: Krishna Pal Singh Yadav, Rita Bahuguna Joshi

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

LOK SABHA STARRED QUESTION NO. 2

ANSWERED ON MONDAY, JULY 18, 2022/ ASHADHA 27, 1944 (SAKA)

## STUDY ON IMPACT OF CSR QUESTION

- *2.  DR. KRISHNA PAL SINGH YADAV: PROF. RITA BAHUGUNA JOSHI:

Will the Minister of CORPORATE AFFAIRS कारपोरेट कार्य मंत्री be pleased to state:

- (a) whether there has been any structured study of the impact of the enforcement of the Act pertaining to Corporate Social Responsibility (CSR);

- (b) if so, the details thereof including the details of its major findings;

- (c) if not, whether the Government will consider undertaking any such study and if so, the details thereof;

- (d) whether the Government has come across any cases of companies not abiding by the provisions of CSR Act and if so, the details thereof; and

- (e) the  kind  of  measures  the  Government  has  been  contemplating  to  make companies abide by the CSR Act?

## ANSWER

THE MINISTER OF FINANCE

AND CORPORATE AFFAIRS                              (SHRIMATI NIRMALA SITHARAMAN)

वित्त एिं कारपोरेट कार्य मंत्री सीतारामि )

(

श्रीमती निमयला

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

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STATEMENT REFERRED TO IN REPLY TO PART (a) TO (e) OF LOK SABHA STARRED QUESTION NO. *2 FOR 18 TH  JULY, 2022 REGARDING ' STUDY ON IMPACT OF CSR ' .

- (a)  to  (c):    There  is  no  structured  study  carried  out  by  the  Ministry  of  Corporate Affairs (MCA) regarding impact of enforcement of Corporate Social Responsibility (CSR) provisions of the Companies Act,2013 ('Act'). However, in the past, MCA had constituted two High Level Committees (HLC) on CSR in 2015 and 2018 to review the  CSR  framework  and  make  recommendations  to  develop  a  more  robust  and coherent CSR regulatory and policy framework.  The Report of HLC-2018 is available in  public  domain  at  www.mca.gov.in.  The  HLC-2018  noted  that  since  legislation mandated CSR, companies are responding positively and have shown encouraging signs  in  adopting  the  culture  of  being  responsible  towards  society.  This  is manifested through increase in the number of companies contributing to CSR as well  as  increase  in  their  annual  CSR  expenditure.  Even  many  companies  are contributing more than their mandatory 2% and have become part of the national development priorities. Some of the major recommendations of HLC-2018 are as follows:
- (i) Non-compliance of CSR may be made a civil wrong.
- (ii) Companies having CSR amount less than Rs.50 Lakhs may be exempt from constituting CSR Committee.
- (iii) Transfer of unspent CSR funds to separate designated account created for that purpose.
- (iv) Mandatory registration of implementing agencies.
- (v) Impact assessment of certain categories of projects by certain class of companies.
- (vi) Development  of  CSR  Exchange  Portal  as  a  marketplace  to  facilitate matchmaking between companies and implementing agencies.
- (d):  CSR is a Board driven process, and the Board of the company is empowered to plan, decide, execute, and monitor the CSR activities of the company based on the recommendation of its CSR Committee. The CSR architecture is disclosure based and CSR mandated companies are required to file details of CSR activities annually in  MCA21  registry.  The  Government  monitors  the  compliance  of  CSR  provisions through the disclosures made by the companies in MCA21 Portal. Whenever any violation of CSR provisions is reported, action against such non-compliant company 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. So far, sanction for prosecution has been accorded in 366 cases. Of these, 155  applications  for  compounding  have  been  made  and  105  cases  have  been compounded. Now, the non-compliance of CSR provisions has been made a civil wrong w. e. f. 22 nd  January, 2021.
- (e):   Based on the recommendations made by HLC-2018, Section 135 of the Act was amended vide Companies (Amendment) Act, 2019 and Companies (Amendment) Act, 2020. These amendments provided for the transfer of unspent CSR amount and made the non-compliance of CSR provisions a civil wrong w.e.f. 22nd January 2021. Further, Companies (CSR Policy) Rules, 2014 were also amended which have strengthened the CSR  eco-system  by  bringing  more  objectivity, transparency, entrusting  more responsibility on the board and enhancing the disclosures by the companies.
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