CSR Provisions in Operation

In the latest NSE quarterly briefing titled “Statutory CSR Under the Companies Act – Stylized Facts and the Way Forward”, Professor Subrata Sarkar examines the manner in which companies have complied with the provisions relating to corporate social responsibility (CSR) under the Companies Act, 2013.

An executive summary of the briefing is as follows:

– The legal provision mandating CSR expenditure for all listed companies satisfying certain specific criteria came on 30th August 2013 under the Companies Act, 2013.

– An analysis of the first two years of data on CSR expenditures shows that:

– A small number of large, profitable companies account for the bulk of the CSR expenditure;

– Education, health and environmental sustainability together account for about half of the total CSR expenditure;

– Contribution to government relief funds is picking up sharply, perhaps because the smaller companies find it a very convenient route;

– The distribution of CSR expenditure across states is also highly skewed, with Maharashtra accounting for about one-fourth. There are indications that CSR expenditure is relating high in states with high concentration of factors.

– An analysis of these early trends could provide useful insights to review the implementation framework of CSR and fine-tune it in the coming years so that CSR activities can better attain the objectives for which they were designed.

 

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.

1 comment

  • Good data points to know. However, there are quite a few errors in the document as follows;
    1. CSR provisions came into effect from 1 April 2014 vide notification dated 27 February 2014 and not not on 30th August 2013. The statement further says that “Legal provisions mandating CSR expenditure for “all listed companies….” CSR provisions were not notified only for listed companies. However, since its an NSE documents, I understand that the reference only to “Listed Companies” is made.
    2. Its mentioned in a footnote that this idea reflected in SEBI’s LODR that top 500 listed companies disclose their expenditure on CSR in BRR. BRR was notified by way of a separate circular and this has no connection with LODR as such.
    3. Schedule VII of CA 2013 provides itemised list of “Eleven” and not “Ten” broad activities. [Its a very small error but I’m highlighting it here as reference to a specific number is made in the write up]
    4. Reference is made to item number (ix) [clause number is not correct] in connection with PM relief fund or any other fund set up by the central of state government. Schedule VII has been amended and any fund set up by “State Governments” is no more there. It only recognises the funds set up by central government.
    Thanks.

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