Decriminalisation of CSR Violation | 24 Aug 2019
Finance Minister has announced that corporate social responsibility (CSR) violations would not be treated as criminal offences and would instead be a civil liability.
- The imprisonment of up to 3 years for officials of companies that fail to comply with the specified corporate social responsibility (CSR) expenditure has been rolled back.
- Recently, Injeti Srinivas panel had been set up to study CSR expenditure.
- Implications of decriminalisation of CSR Violations:
- It will allow the corporations to think and employ their CSR funds in an effective way.
- Freedom to decide and choose the field of CSR related work for corporations.
- Recently, Parliament passed amendments to the Companies Act, 2013 which includes:
- Unspent CSR funds by companies should be transferred into an escrow account called Unspent Corporate Social Responsibility Account.
- The transferred funds needs to be utilised within three years of transfer.
- Any unspent annual CSR funds must be transferred to one of the funds under Schedule 7 of the Companies Act like Prime Minister’s Relief Fund within six months of the financial-year end.
- Corporate Social Responsibility
- Under the Companies Act, 2013, certain classes of profitable entities are required to spend at least two per cent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) in a particular financial year.