CSR Provisions Soon to be Effective

The provisions of the Companies Act, 2013 and the rules
thereon pertaining to corporate social responsibility (CSR) have been notified
yesterday. They will take effect from April 1, 2014. A copy of the rules as
notified is available here.
As for the specific CSR activities, Schedule VII of the Companies
Act containing the list of permitted activities has been amended.
While we will have occasion to discuss some of the details
in due course, it appears that the rules are fairly prescriptive
as to the nature of CSR activities that companies can carry out. Moreover, it
has been explicitly stated that political funding by corporates it outside the
purview of CSR, and understandably so. Some of the other issues discussed
continue in the new version as well, including the fact that
employee benefits will not be encompassed within CSR.

April 1 this year would mark a new era in
corporate law and governance in India with companies being required to comply
with the quasi-mandatory obligations regarding CSR, an approach that is fairly
unique in the global context.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

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