Press Information Bureau

Government of India

Ministry of Corporate Affairs

10-December, 2012 19:28 IST

Clause 135 of the Companies Bill, 2011 inter alia, provides for the specified companies to spend at least 2% of the average net profits (of last 3 years) in pursuance of the company’s Corporate Social Responsibilities (CSR) policy and in case of failure, to specify the reasons for not spending such amount in the Board’s Report. Giving this information in written reply to a question in the Rajya Sabha today, Shri Sachin Pilot, Minister of Corporate Affairs, said that in case the disclosure about such reasons in the Board’s report is not made, the specified class of companies shall be liable for action under the provisions of the Companies Bill, 2011 which require disclosures to be made in the Board’s report. CSR policy is to be undertaken by the companies as specified in schedule VII of the Companies Bill, 2011.

 

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Corporate social responsibility obligation requires specified companies to allocate mandated profit share and disclose reasons for any shortfall. Clause 135 requires specified companies to allocate a fixed proportion of average net profits to activities under Schedule VII and to formulate a CSR policy; if the prescribed expenditure is not made, companies must disclose reasons for the shortfall in the Board's Report, and failure to make that disclosure attracts liability under the Companies Bill's disclosure provisions.