CORPORATE SOCIAL RESPONSIBILITY - UNDER THE INDIAN COMPANIES ACT

INTRODUCTION:

Corporatesocial responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. The concept of CSR is based on the ideology of give and take. Companies take resources from society and the environment. By engaging in corporate social responsibility (CSR) activities, companies are giving back to society. CSR aims to create a positive impact on society. 

In India, the concept of CSR is widely recognized and applied through various lenses such as business responsibility, sustainable development, philanthropy, corporate citizenship, socio-economic responsibility, etc. 

CORPORATE SOCIAL RESPONSIBILITY UNDER THE INDIAN COMPANIES ACT:

The qualifying companies are required to form a CSR committee. They are needed to spend at least 2% of their average net profit for the 3 previous consecutive final years on CSR. Section 135 of the Company Act mandates that companies shall establish a Corporate Social Responsibility (CSR) Committee. 

• Section 135 of the Indian Company Act 2013 states that every company having a net worth of rupees five hundred crore or more, or a turnover of rupees one thousand crore, or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one shall be an independent director.
• The board’s report shall disclose the composition of the CSR Committee. 
• The Corporate Social Responsibility Committee shall

a.              Formulate and recommend to the board a corporate social responsibility policy which shall indicate the activities to be undertaken by the company as specified in SCHEDULE VII; 

b.              Recommend the amount of expenditure to be incurred on the activities of the company regarding corporate social responsibility from time to time.

• The board of every company shall, after taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the company's website, if any, in such manner as may be prescribed; 
• Ensure that the activities that are included in the Corporate Social Responsibility Policy of the company are undertaken by the company. 
• The Board of every company shall ensure that the company spends, in every financial year, at least two percent of the average net profits of the company made during the three immediately preceding financial years in pursuance of its Corporate Social Responsibility Policy
• Provided that the company shall give preference to the local area and areas around it where it operates for spending the amount earmarked for corporate social responsibility activities.

 

SCHEDULE VII OF THE COMPANY ACT 2013:

Activities relating to corporate social responsibility:

1. Eradicating extreme hunger and poverty.
2. Promotion of education.
3. Promoting gender equality and empowering women.
4. Reducing child mortality and improving maternal health.
5. Combating viruses, acquired immune deficiency syndrome, malaria, and other diseases.
6. Ensuring sustainable development 
7. Employment-enhancing vocational skills
8. Social business project. 
9. Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government or the State Government for socio-economic development, relief, and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities, and women.
10. Such other matter as may be prescribed. 

 

EXAMPLES 

TATA POWER: Priorities empowering women through self-help groups in the Kutch region of Gujarat. 

INFOSYS: They have taken up projects like the restoration of water bodies in Karnataka and metro station construction in partnership with Bangalore Metro Rail Corporation Limited. 

AMUL has contributed to rural health and development through the Tribhuvandas Foundation. They have also established Swarnjayanti Gram Swarozgar Yojana, a holistic self-employment program in Kheda district.

 

CONCLUSION

Corporate Social Responsibility (CSR) has evolved from a voluntary ethical practice to a legally mandated obligation under Indian corporate law. It reflects a shift in corporate governance, where businesses are no longer judged solely by profitability but also by their contributions to social welfare and sustainable development. CSR is not just a tool of philanthropy but a legal compliance that promotes accountability, transparency, and growth. It reinforces the idea that corporate success and social growth can go hand-in-hand. 

Closing Credits

Author: ANUSHKA MANE

"The views expressed are personal. This article is intended for educational purposes and public discourse. Feedback and constructive criticism are welcome!"