Companies Act 2013

Trending Today AN ANALYSIS OF THE ROLE OF CSR IN THE COMPANIES ACT 2013 On April 14, the center announces a day off in honor of Ambedkar’s birthday anniversary. The Supreme Court requires a preliminary investigation before filing a formal complaint for some speech and expression-related offenses. Orissa High Court Fines Woman Who Sought Pet Dog’s Custody From Daughter-In-Law After Dowry Dispute Breaking: Aasaram Bapu’s interim bail in the rape case is extended by the Gujarat High Court after a tie-breaker judge determines adequate medical justification. “Battle Between Law, Faith, and Politics”: New Controversy Is Sparked by Namaz Curbs in Uttar Pradesh Shattering the Stereotypes: Separating Fact from Fiction in Personal Injury Lawsuits Punjab Government Notifies Supreme Court of Farmers’ Protest | Dallewal Ends Quickly, NH Opens After Removing Demonstrators The Madhya Pradesh High Court has ruled that law schools who admit candidates with no BCI authorization would face criminal charges. Supreme Court: Motor Accident Claims | Multiplier Cannot Be Dropped Since Complainant Was Making Foreign Currency AN ANALYSIS OF THE ROLE OF CSR IN THE COMPANIES ACT 2013 31 Mar 2025 Kritavirya Choudhary INTRODUCTION For many years, corporations have been criticised by many in society for turning a blind eye and not caring enough for the needs of the people and the environment. They have also been berated for damaging the environment while making little effort to replenish it. Not surprisingly, the people most affected by this are the downtrodden and the less privileged section of society. There has been a lot of debate about the role that should be played by corporations in responding to the needs of society. This leads us to the concept of Corporate Social Responsibility (CSR). It is a type of business model wherein the company can make itself socially accountable to all the stakeholders, people, and the environment and can help create a positive brand image for itself. By adopting the practice of CSR, a company can assess the impact it makes on society as a whole and it can come up with measures to reverse the negative impact. Initially, Corporate Social Responsibility began as a voluntary initiative of the companies to improve the well-being of the workers who were subjected to work under harsh conditions during the period of the Industrial Revolution. However, now CSR has become mandatory in certain jurisdictions, including India. In fact, India was the first country in the world to legally mandate CSR through the Companies Act 2013. HISTORY OF CORPORATE SOCIAL RESPONSIBILITY The earliest existence of a form of CSR could be traced to the 18th century when certain faith-based groups refused to invest in industries related to alcohol, tobacco, the slave trade, war-linked ventures, and other industries that were not aligned with their belief system. In the 19th century, the establishment of Carnegie Libraries took place by a wealthy businessman named Andrew Carnegie. The Carnegie Libraries provided the public with free access to books and other related educational content. By 1919, more than 2,500 libraries had opened across the world. Carnegie further argued for the wealthy to donate to social causes in his book The Gospel of Wealth. John D. Rockefeller established the Rockefeller Foundation intending to promote medical research and public health. He had also donated half of his wealth to social causes. During World War I, there was a significant rise of ‘Community Chests’ with the aim of pooling resources and soliciting the wealthy in a centralized manner. The Pioneer Fund was the first mutual fund to use socially conscious criteria and refused to invest in companies linked to alcohol, tobacco, gambling, etc. The most significant contribution to CSR was made by Howard Bowen, who is also known as the “Father of CSR”. He emphasized the role of corporations towards society and wrote a book named Social Responsibilities of the Businessman. India also had a form of CSR in the ancient era, though it was not known by that name. For example, during the pre-industrial period, affluent merchants would distribute a portion of their wealth to society by establishing temples for religious purposes. Additionally, these merchants would provide food to underprivileged members of society during famines and other calamities. Later, in the 20th century, Mahatma Gandhi introduced the idea of “trusteeship“. According to this idea, wealthy industrialists were expected to manage their wealth in a manner that would benefit all members of society. OBJECTIVES BEHIND IMPLEMENTING CSR PROVISIONS The introduction of CSR in the Companies Act 2013 serves multiple purposes. First, CSR encourages companies to contribute to development and social welfare. Secondly, it ensures that there is corporate accountability by ensuring that businesses operate sustainably and ethically. Thirdly, CSR is a means by which economic disparities could be addressed by the funding of community-driven projects by the companies. Lastly, contributing to CSR plays a huge role in enhancing goodwill and boosting the brand value and reputation of the company. CORPORATE SOCIAL RESPONSIBILITY UNDER THE COMPANIES ACT 2013 India became the first country to implement compulsory Corporate Social Responsibility (CSR) requirements for specific companies after the Companies Act 2013 was passed. Section 135 of this legislation focuses on Corporate Social Responsibility. As per Section 135, any company with a turnover of one thousand crore rupees, a net worth of five hundred crore rupees, or a net profit of five crore rupees is required to allocate at least two percent of its average net profits from the previous three financial years towards CSR initiatives. The activities eligible for CSR spending are outlined in the 7th Schedule of the Act. Additionally, Section 135 requires the establishment of a Corporate Social Responsibility Committee within the Board, consisting of three or more directors, with at least one being an independent director. The main responsibilities of this committee include the development, execution, and oversight of the company’s Corporate Social Responsibility Policy. The computation of net profit for the purpose of CSR is given under Section 198 of the Companies Act 2013. Credit cannot be certain sums for computing the