Briefing on Corporate Social Responsibility

The NSE Centre for
Excellence in Corporate Governance (CECG) has issued its most recent quarterly
briefing titled Corporate
Social Responsibility Under Companies Act, 2013
authored by Prof.
Subrata Sarkar
. The executive summary is as follows:
The
newly enacted Companies Act, 2013 and the Rules notified thereunder makes it
statutory for all companies above a certain size to spend 2 percent of their
profits towards meeting Corporate Social Responsibility. India is the first
country in the world to have mandatory CSR spending (with provisions for
exemption) along with mandatory reporting. According to some quick estimates,
Indian companies have to spend upwards of Rs. 10,000 crores on CSR in FY 15 and
more in subsequent years as the corporate profits grow. While the new CSR
regulations will not be a game changer in terms of enhancing overall social
spending, the Briefing–after assessing their pros and cons–argues that the
CSR regulations are a step in the right direction. The implementation of the
new CSR regulations, however, entails certain challenges, which would require
measures such as improved regulatory oversight, further clarity on what
constitutes CSR spending and coordination among companies. The success of the
CSR regulations would depend mainly on how well these challenges are addressed.

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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