The Ministry of Corporate Affairs through circular dated 25th August 2021 has issued Frequently Asked Questions (FAQs) on Corporate Social Responsibility. The objective of CSR provisions is to involve the corporates as partners in the social development process. Use of corporate innovations and management skills in the delivery of ‘public goods’ is at the core of CSR implementation by the companies. Therefore, CSR should not be interpreted as a source of financing the resource gaps in Government Schemes. However, the Board of the eligible company may undertake similar activities independently.
The FAQ clarifies that the responsibilities of the Board of a CSR-eligible company, inter-alia, include the following:
(i) Approve the CSR policy;
(ii) Disclose contents of such policy in its report and also place it on the company’s website, if any;
(iii) Ensure that the activities included in the CSR policy are undertaken by the company;
(iv) Ensure that the company spends, in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years;
(v) Satisfy itself regarding the utilization of the disbursed CSR funds; and
(vi) If the company fails to spend at least at least two per cent of the average net profits of the company, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount and transfer the unspent CSR amount as per provisions of sections 135(5) and 135(6) of the Act.
