Pilot, who is at the helm of Corporate Affairs Ministry, is implementing the legislation, said the decision rests with the board of companies, on how to spend money on social welfare schemes.Pilot, who is at the helm of Corporate Affairs Ministry, is implementing the legislation, said the decision rests with the board of companies, on how to spend money on social welfare schemes.
Press Trust of India
NEW DELHI: With the new law requiring certain class of companies to spend on CSR efforts, Union Minister Sachin Pilot today said neither the central nor state governments can tell corporates on how to spend money towards social welfare activities.
The new Companies Act, 2013, requires certain class of profitable entities to shell out at least three per cent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) activities.
Pilot, who is at the helm of Corporate Affairs Ministry, which is implementing the legislation, said the ultimate decision on how to spend money towards CSR activities would be with the board of the company.
“I am very clear that it cannot be the Ministry or the Secretary or the state government that will tell you on how to spend the (CSR) money,” Pilot said at an event here. “We don’t want to be the judge and jury on how to spend the CSR money,” he said. The government is in the process of finalising the new Companies Act.
“We have made sure that environment, ecology, wildlife… all of these have been put as part of areas where companies can spend the money if they wish,” the Minister said.
Under the Companies Act, 2013, that replaces the nearly six-decade old legislation governing the way corporates function and are regulated in India, profitable companies with a sizeable business would have to spend every year at least 2 per cent of three-year average profit on CSR works.
This would apply to the companies with a turnover of Rs 1,000 crore and more, or net worth of Rs 500 crore and more, or net profit of Rs 5 crore and more.
The new rules, which would be applicable from 2014-15 fiscal, also require the companies to set up a CSR committee of their board members, including at least one independent director.