Satyajeet

sanjaysatyajeet@gmail.com

Answer all questions 60 marks

November 2019

1. What was the HLC 2015 mandated to address with reference to Section 135 of Schedule
VII of the CSR Policy Rules?

COMPANIES ACT, 2013 The Companies Act, 2013 through Section 135, has introduced
mandatory provisions for CSR as applicable on certain classes of companies.

These provisions include the following:

1. Companies following under any of the below mentioned criteria shall have to mandatorily
follow provisions of Section 135:-

a. Having a minimum net worth of R500 crore;

b. Having a minimum turnover of R1,000 crore; and

c. Having a minimum net profit of R5 crore.

2. Companies which fall under either of the above mentioned criteria shall have to constitute
a Corporate Social Responsibility Committee of the Board consisting of three or more
directors, out of which one shall be an independent director.

3. Roles of the committee shall be as follows:-

a. To formulate and recommend a CSR policy to the board;

b. To recommend amount of expenditure to be incurred on CSR activities; and c. To monitor

the implementation of CSR policy of the company from time to time.

4. Roles of the Board formed of three directors shall be as follows:-

 a. To approve the CSR policy recommended by the CSR committee and disclose the contents
of such policy in its report and place it on company’s website;

b. To ensure the CSR activities are undertaken by the company;

c. To ensure 2% spending on CSR activities;

d. To report CSR activities in Board’s report and disclose non-compliance (if any) with the CSR
provisions; and

e. The draft CSR rules provide the format in which all qualifying companies shall report the
details of their CSR initiatives in the Director’s report and in the company’s website

2. What is the role of corporations as partners in social development and the framework
to strengthen social responsibility of business?

People living in stressful situations usually have multiple needs. A parent alone may need a job,
training, access to reliable childcare, support for a medical condition, and adequate shelter.
Community needs vary from region to region and across regions. Any one organisation is not in
a position to support, address or tackle issues that face our communities. Yet, the larger the
number of organisations involved in making something worthwhile happen, the harder it is to
organise. In order to build capability within communities and share skills and resources that are
increasingly scarce, it is important that business, government and NFPs collaborate and work in
partnership..

Corporations as partners in social development

Several reports have documented the rich tradition of social

engagement/charity/ philanthropy by Corporate India since the 1900’s
(Sood & Arora, 20061; Sundar, 20002). The earliest industrialists of the
19th Century launched the practices of corporate giving via trusts, and
endowed institutions controlled by members of business families. The
concept had therefore been expanded from the narrower notion of
charitable giving for community affairs to the idea that business must be
profitable, just, humane, efficient and dynamic (Arora & Sood, 2006
the 1970’s and 1980’s, with India’s continued poor ranking on social and
economic indicators, the government coaxed the industry to consider
the larger good of India (Sundar 2000). The gradual changes in the
economic paradigm from the 1980s onward saw a large increase in
corporate activity. This also led to Indian businesses becoming more
exposed to both domestic and foreign competition. Around the mid-
1990s, as the liberalization of the Indian economy began to intensify,
several competing large industry associations in India started forming a
separate division focused on social development.
By 2000, many Indian companies had become global players and several
MNC’s had set up their subsidiaries in India. As members of industry
forums and also as key economic actors in the country, they began to
engage in social development. The global discourse on CSR was
gradually moving away from charity to strategic CSR and shared values.
During this period, with the enactment of Companies Act, 2013, CSR
became mandatory.

Corporate Social Responsibility is defined as the voluntary commitment of businesses to include

in their corporate practices economic, social, and environmental criteria and actions, which are
above and beyond legislative requirements and related to a broader range of stakeholders—
everyone influenced by their activities.

3. State some of the most significant

a. milestones in the evolution of responsible business conduct in India

Significant milestones in the evolution of responsible business conduct

in India
SIGNIFICANT MILESTONES IN EVOLUTION OF RESPONSIBLE
YEAR BUSINESS
CONDUCT IN INDIA
 Corporate Voluntary Guidelines released to encourage corporates
2009 to
voluntarily achieve high standards of Corporate Governance
Endorsement of United Nations Guiding Principles on Business &
2011 Human
Rights by India
National Voluntary Guidelines on Social, Environmental and
Economic
2011 Responsibilities of Business (NVGs) released to mainstream the
concept of
business responsibility
Securities and Exchange Board of India (SEBI) mandates top 100
listed
2012 companies by market capitalization to file Business Responsibility
Reports
(BRR) based on NVGs.
2013 Enactment of Companies Act, 2013
Section 135 of Companies Act, 2013 on Corporate Social
2014 Responsibility (CSR)
comes in to force.
High Level Committee on CSR (HLC-2015) under the chairmanship
of Shri.
2015 Anil Baijal makes recommendations on the CSR framework and
stakeholder
concerns.
SEBI extends BRR reporting to top 500 companies by market
2015
capitalization.
 Companies Law Committee reviews the recommendations of HLC-
2016 2015 for
adoption.
The second High Level Committee on CSR constituted under the
Chairmanship of Shri. Injeti Srinivas, Secretary, Corporate Affairs
2018
to review
the CSR framework
4.
20
Committee on Business Responsibility reporting
constituted under the
2018 chairmanship of Shri. Gyaneshwar Kumar Singh,
Joint Secretary, Corporate
Affairs

Zero Draft of National Action Plan on Business and

2018 Human Rights released
by Ministry of Corporate Affairs

National Guidelines on Responsible Business

2019
Conduct released.
5. In the overall context spelt out above, the Committee adopted the following broad
principles while making its recommendations.
a. Improving the CSR framework and ecosystem while placing it in the larger
context of responsible business conduct by companies as manifested in UNGPs,
NGRBCs and India’s commitment to developing a NAP. All recommendations
aim towards achieving SDGs.
b. Easing the burden of compliance for businesses.
c. Focusing on accomplishment of impacts for every rupee invested.
d. Retaining the thrust of CSR as driven by Boards of companies.
 e. Nurturing a culture of compliance through enhanced disclosures wherein
penalties deter rather than punish.
f. Encouraging innovations and carrying out pilot studies for CSR to enable
meeting SDGs
a. elements of CSR Compliance

6. Internal Assessment.

Before designing a CSR strategy it is often helpful to assess your current CSR activities,
looking at the whole picture what CSR policies, programs, and structures are already in
place and where the “gaps” are.

7. Put it in writing.

Ensure that your company creates a separate CSR statement or embeds its CSR
commitment within the company’s mission or values statement, code of conduct or other
appropriate company policy.

8. Embed CSR into the company planning and budget processes.

The ultimate goal of creating a CSR management system is to ensure that CSR
considerations are a part of all business decisions.

9. Develop processes for employees to raise CSR issues and concerns to appropriate
decision-makers and advocates.

An open environment is one of the easiest ways to solicit valuable feedback on CSR issues
and problems.

10. Formalize the board- and executive- level responsibility for CSR issues.

It is virtually impossible to successfully implement CSR in your company without board,

executive and senior management buy-in, support, and accountability for CSR
 performance. Your ability to build senior-level vision and support will have a direct impact
on the depth, breadth, longevity and overall effectiveness of your CSR work.

11. Communicate CSR performance visibly and frequently to all employees.

Whether through newsletters, annual reports, intranet communication, meetings,

training or other informal mechanisms, make sure your employees know CSR is a
company priority.

12. Put CSR on the agenda of meetings at all levels of the company.

This includes the board, executive and senior management, companywide meetings and
departmental communications.

13. Provide training for employees directly involved in CSR activities.

This is an ongoing commitment since training needs will change as the company’s CSR
issues change and evolve.

14. Create CSR accountability at all employee levels.

Build CSR responsibilities into the job descriptions and performance evaluations of
employees at all levels.

15. Measure and communicate your performance.

a. mode of implementation of CSR projects

 By Trusts/ Societies/ Section 8 Company set up by the Company itself.

 By Trust/ Societies/ Section 8 Company set up by Central or State Government or entities
established under Special act of Parliament/ State legislature.
 Other Implementing Agency.
 Directly by company.
b. Section 135 (1) of the Act.
c. Section 135(1): Every company having net worth of rupees five hundred crore or
more,or turnover of rupees one thousand crore or more, or a net profit of rupees
five croreor more, during any financial year, shall constitute a Corporate Social
Responsibilityommittee of the Board consisting of three or more directors, out of
which at leastone director shall be an independent director.
Section135(1)specifieseligibility for undertaking CSR activities as Net Worth of Rs.
500crores,orTurnoverRs.1000crores, or Net Profit of Rs. 5 crores for the preceding
year. during any financial year Has to constitute a CSR Committee of the Board
consisting of three or more Directors of which at least one should be independent
Director. All such companies have to spend 2% of their average net profit for
preceding three FY on activities listed in Schedule VII and/or activities as per their
CSRPolicy.Section135(1)
Section 135(1) provides criteria for CSR eligibility of a company. The Companies
(Amendment) Act, 2017 has amended the eligibility criteria as being based on
financial parameters of the ‘immediately preceding’ financial year instead of three
immediately preceding financial years prevalent until then.