According to new CSR norms, a company has to earmark a part of its profit towards social activities and transfer all unspent amount into an escrow account (if it is an ongoing project)
Corporate India is worried over mandatory spending on corporate social responsibility (CSR) under the new amendments to the Companies Act, which now provides for a three-year jail term if the new CSR norms are not followed.
“We had not anticipated penal provisions. Equating unspent amount to a criminal offence is a harsh step. This is an indication that we are focusing on spending rather than the outcome,” Rumjhum Chatterjee, chairperson-national committee of CSR, Confederation of Indian Industry, told Business Standard.
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According to the new CSR norms under Section 135 of the Companies Act, a company has to earmark a part of its profit towards social activities and transfer all unspent amount into an escrow account (if it is an ongoing project). This account will be opened by the company concerned in a bank and be called the ‘unspent CSR account’.
In case the money remains unspent in three years, it will be transferred to any fund specified in Schedule VII of the Act. Experts feel this ‘over-regulation’ may not go down well with the industry and that the government may enforce its agenda through CSR obligations of corporates.
Source: Business Standard
