The Indian subsidiary of American industrial giant Stanley Black & Decker has been fined Rs 2.16 crore by the Ministry of Corporate Affairs for alleged breaches of Corporate Social Responsibility (CSR) regulations. This significant penalty underscores the growing scrutiny of CSR compliance among multinational corporations operating in India.
Details of the Penalty
The penalty, imposed by the Registrar of Companies (RoC) for Maharashtra, specifically targets Stanley Black & Decker India and four of its key executives. According to an official order dated August 1, the company failed to transfer its unspent CSR funds to a designated account within the stipulated timeframe, a clear violation of the Companies Act, 2013.
| Key Point | Details |
|---|---|
| Penalty Imposed | Rs 2.16 crore |
| Penalized Entity | Stanley Black & Decker India |
| Governing Body | Registrar of Companies (RoC) for Maharashtra |
| Violation | Failure to transfer unspent CSR funds to a special account within the stipulated timeframe |
| Relevant Sections of the Companies Act | Section 135 (5) and Section 135 (7) of the Companies Act, 2013 |
| Amount Not Transferred on Time | Rs 1.2 crore (2020-21) and Rs 1.28 crore (2021-22) |
| Company’s Response | Requested full waiver of the penalty; initiated a suo motu application |
| Appeal Process | Company can appeal the order with the Regional Director (West) within 60 days |
| CSR Spending Requirement | At least 2% of average net profit from the previous three financial years on social initiatives |
| Related Incident | Nestaway fined Rs 3.05 lakh by RoC Karnataka for failing to update registered office address on time |
CSR Fund Transfer Requirements
Under the Companies Act, 2013, companies are mandated to transfer any unspent CSR amount to a special account within 30 days of the end of the relevant financial year. Stanley Black & Decker was required to transfer Rs 1.2 crore for the financial year 2020-21 and an additional Rs 1.28 crore for 2021-22. However, the company did not adhere to these requirements, resulting in the penalty under Section 135 (7) of the Companies Act.
Company’s Response and Appeal Process
In its defense, Stanley Black & Decker India argued that the delay was unintentional and requested a full waiver of the penalty. The company stated that it had already initiated a suo motu application in this matter, emphasizing that there was no willful default on its part. The company has the right to appeal the order with the Regional Director (West) within 60 days.
Understanding CSR Obligations
Corporate Social Responsibility is a legal obligation for companies meeting certain financial thresholds in India. They are required to spend at least 2% of their average net profit from the previous three financial years on approved social initiatives. Failure to comply with these rules can result in significant penalties, as demonstrated in this case.
Increasing Corporate Scrutiny
The penalty against Stanley Black & Decker India is part of a broader trend where the Indian government is intensifying its oversight of CSR activities. More companies are now proactively approaching authorities to resolve minor compliance issues and avoid larger penalties, reflecting the increasing importance of maintaining clean corporate records.
Other Instances of Compliance Penalties
In a related incident, the RoC for Karnataka fined managed home rental network Nestaway Rs 3.05 lakh for failing to notify authorities about the change in its registered office address in a timely manner. The penalty was imposed on the company and its four directors, highlighting the stringent approach being adopted by regulatory bodies towards corporate governance in India.
Conclusion
The penalty against Stanley Black & Decker India serves as a reminder of the critical importance of CSR compliance for companies operating in India. As the government continues to enforce these regulations rigorously, companies must ensure they meet all legal requirements to avoid financial penalties and protect their reputations.
इसे हिंदी में भी पढ़ें: CSR नियमों के उल्लंघन पर Stanley Black & Decker पर 2.16 करोड़ रुपये का जुर्माना
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