The policy relating to corporate sector in terms of regulation of companies, the manner of operation of their affairs and compliances for regulatory purposes with respect to their management and finances etc. is contained in Companies Act 2013 and Rules made there under. The Act seeks to bring the system of/policy relating to regulation of companies at par with the best practices in the developed countries.

Section 135 of the Companies Act, 2013 mandates companies with a turnover of ₹ 1000 crore or more, or net worth of ₹ 500 crore or more or net profit of ₹ 5 crore or more to undertake expenditure on Corporate Social Responsibility (CSR). Areas to be included in CSR expenditure are enumerated in Schedule VII of the Act. This being the first year of implementation of the provisions, it will be possible to initiate monitoring of the CSR activities under the above provision from next year only.

This was stated by Smt. Nirmala Sitharaman, MoS in the Ministry of Corporate Affairs in written reply to a question in the Rajya Sabha today.

Corporate Social Responsibility mandate requires qualifying companies to fund Schedule VII activities and prompts phased monitoring measures. A statutory Corporate Social Responsibility obligation under the Companies Act, 2013 requires companies meeting prescribed economic thresholds to spend on activities enumerated in Schedule VII; implementation began with the Act and systematic monitoring of CSR compliance is expected to be developed after the first year of operation.