Minister of State for Corporate Affairs P P Chaudhary said that a penal action will be initiated against 160 firms for failing to comply with CSR norms under Companies Act 2013. In an interview with PTI, he said that Ministry of Corporate Affairs is keeping a close tab on company’s compliance with CSR provisions and also served show-cause notices to 1,018 defaulting companies.
He also asserted that as far as spending the CSR amount is concerned, government does not interfere in it because earmarking of CSR funds of companies for any particular activity/activities is beyond the purview of the Companies Act and boards of respective companies have been empowered to take such decisions of where and how they want to allocate the requisite amount. However, compliance is monitored by way of mandatory disclosure requirements under the Companies Act, 2013.
According to Clause 135 of Companies Act 2013, companies need to spend 2% of average net profits made on 3 preceding years on CSR activities. If the requisite amount is not spent then the companies have to provide the reason for the same.
According to Chaudhary, based on the reports of Regional Directors (RDs) and Registrar of Companies (RoCs), the ministry has accorded permission for initiating penal action under section 134(8) of the act for non-compliance with CSR norms against 160 companies. The penal action is being initiated with respect to non- compliance during the financial year 2014-15. Section 134(8) also provides for the provision of imposing a minimum fine of INR 50,000 and it may go up to INR 25 lakh for certain violations.
As per the data provided by the ministry earlier this year, during 2014-15 and 2015-16 Rs 18,625 crore has been spent on CSR activities by 12,431 companies. Out of the total, 7,334 firms had shelled out Rs 8,803 crore in 2014-15