Asian Journal of Management

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Impact of the proposed Corporate Social Responsibility mandate in the new Companies Bill 2012 of India


Affiliations
1 Department of Studies in Commerce, University of Mysore, Mysore, India
     

   Subscribe/Renew Journal


Clause No.135 in the Companies Bill 2012 states that every company with a net worth of Rs 500 crore or an annual turnover of Rs 1,000 crore or a net profit of Rs 5 crore has to create a CSR committee, of which at least one board director must be independent. The company's board shall ensure that at least 2% of its annual average net profit made during the three preceding financial years is spent on CSR every financial year. If the company fails to spend such amount, the board shall specify the reasons for not spending the amount. However, the bill does not specify any penalty or legal implications for not adhering to the 2% CSR mandate. The enactment of a new legislation in 2013 could prove to be a turning point for Corporate Social Responsibility (CSR) activities in India. Most Indian private companies so for involved with short-term philanthropy activities will be obligated to focus on particular social theme and evolve a long term CSR strategy. This paper broadly attempts to provide an understanding of current CSR state of affairs in India and explores the possible future implications of the Companies Bill 2012 on the companies as well as the upon the philosophy of CSR in India.

Keywords

Corporate Social Responsibility, Business, Society, New Companies Bill
Subscription Login to verify subscription
User
Notifications
Font Size


  • Assocham Eco Pulse, – Assocham, (2010). Eco Pulse study on Corporate Social Responsibility by Indian Inc in Q1 2010-11. http://www.indlaw.com/guest/DisplayNews.aspx?4CDEF217- 7FB9-4E01-8231-459EBE988E4C

  • Bapat, Sanjay. (2013). Challenges of the 2% CSR Paradigm. Forbes India. http://forbesindia.com/blog/business-strategy/ challenges -of-the-2-csr-paradigm/

  • Bhowmick, 2010 – Bhowmick, Nilanjana. (2010). Accountability of India's Nonprofits Under Scrutiny.

  • Chattopadhyay, Suvojit. (2012). Mirages in development—the 2% CSR mandate. Live Mint http://www.livemint.com/ Opinion/bAyGGIAoyQgrQfedcQgXxJ/Mirages-indevelopmentthe- 2-CSR-mandate.html

  • CSR Identity Report Card, (2012). Forbes India. http://forbesindia.com/printcontent/34893

  • CSR Conclave: Changing Paradigm of Corporate Social responsibility. October 1, 2010 www.csrcfe.org/csr_conclave.pdf The Companies Bill, 2012. The Ministry Of Corporate Affairs.

  • Dubey, Ranjeev C., (2012). FinePrint: Corporate Czars And CSR. Businessworld | http://www.businessworld.in/en/storypage/- /bw/fineprint-corporate-czars-and-csr/r444998.0/page/0

  • Gautam, Richa and Singh, Anju (2010), Corporate Social Responsibility Practices in India: A Study of Top 500 Companies. Global Business and Management Research: An International Journal. Vol. 2, No. 1, 2010. pp. 41-56

  • Jatana, Renu and Crowther, David, (2007). Corporate Social Responsibility: Theory and Practice with Case Studies. Deep and Deep Publications

  • Keys, Tracey Malnight, Thomas W. and Graaf, Kees van der,(2009) Making the most of CorporateSocialResponsibility.Mckinsey.http:/www.mckinsey.co m/insights/corporatesocialresponsibility/making the most of corporate social responsibility

  • Karim et al., (2012). – Karim, Sohel Rangan, Kash Chase, Lisa A. 2012. Why Every Company Needs a CSR Strategy and How to Build It. Harvard Business School. 12-088

  • Kaye, (2013) – Kaye, Leon, 2013. CSR in India: Are Companies Doing Enough? Triplepundit. http://www.triplepundit.com/ 2013/03/csr-in-india-enough/

  • Kapoor, (2013). – Kapoor, Nita, 2013. Identifying sustainable cause for CSR: A corporate prerogative. Wordpress. http://causeitworks.wordpress.com/2013/04/18/identifyingsustainable- cause-for-csr-a-corporate-prerogative/

  • Madhavi C.V., (2002). Change and Turbulence at SAIL. SAGE Publications

  • Michael Porter and Mark Kramer, “Strategy and society: The link between competitive advantage and corporate social responsibility,” Harvard Business Review, December 2006, Volume 84, Number 12, pp. 78–92.

  • Rana, Namrata,(2010). FMCG-Companies-CSR initiatives for Women and Children-2010. Futurescape

  • Reddy, Dr. Y.R.K. (2010). The Academy of Corporate Governance, CSR Conclave: Changing Paradigm of Corporate Social Responsibility. 2010

  • Rana, (2013) – Rana, Namrata, (2010). FMCG-Companies-CSR initiatives for Women and Children-2010. Futurescape

  • Sundar (2000) – Beyond Business: From Merchant Charity to Corporate Citizenship. Indian Business Philanthropy through the Ages. Tata McGraw-Hill Publishing Company, New Delhi

  • Shah. Payal, (2013). India CSR bill creates ripples in the social sector. Acumen | http://acumen.org/blog/our-world/new-billmeans- big-funding-for-indias-social-enterprises/

  • Shinde, 2005) – Shinde, S (2005), “Social responsibility corporate style”, available at: http://www.expresscomputer online.com/20050502/technologylike01.shtml

  • Tewari, Ruchi,(2010). Information And Technology Sector – A Champion In CSR: Myth or Reality. Great Lakes Herald. Vol 4, No 1, pp 14-18

  • TNS India( 2008), National survey on CSR practices in India. Chapter IV. Times Foundation

  • TimeMagazine,http://www.time.come/time/world/article/o,8599, 2036307,00, html#ixzz2adUfAA5a

  • Karmayog, 2010 – Karmayog, 2010. Details of CSR initiatives of companies in India for 2010. http://www.karmayog.org/intcsr/ int-csr_33920.htm

  • Thomas Lys, James Naughton and Clare Wang, (2013) “Signaling Through Corporate Accountability Reporting,” SSRN Working Paper, Social Science Research Network, Kellogg Insight. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2143259

  • Vardarajan and Menon 1988 – Varadarajan, P. R., and Menon, A. (1988). Cause-Related Marketing: A Coalignment of Marketing Strategy and Corporate Philanthropy. Journal of Marketing, 52(6), 58-74

  • Wharton,2011.IndiaKnowledge@Wharton | http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4 598http://www.mca.gov.in/Ministry/pdf/The_Companies_Bill_20 12.pdf


Abstract Views: 1229

PDF Views: 0




  • Impact of the proposed Corporate Social Responsibility mandate in the new Companies Bill 2012 of India

Abstract Views: 1229  |  PDF Views: 0

Authors

Truptha Shankar
Department of Studies in Commerce, University of Mysore, Mysore, India
H. Rajashekar
Department of Studies in Commerce, University of Mysore, Mysore, India

Abstract


Clause No.135 in the Companies Bill 2012 states that every company with a net worth of Rs 500 crore or an annual turnover of Rs 1,000 crore or a net profit of Rs 5 crore has to create a CSR committee, of which at least one board director must be independent. The company's board shall ensure that at least 2% of its annual average net profit made during the three preceding financial years is spent on CSR every financial year. If the company fails to spend such amount, the board shall specify the reasons for not spending the amount. However, the bill does not specify any penalty or legal implications for not adhering to the 2% CSR mandate. The enactment of a new legislation in 2013 could prove to be a turning point for Corporate Social Responsibility (CSR) activities in India. Most Indian private companies so for involved with short-term philanthropy activities will be obligated to focus on particular social theme and evolve a long term CSR strategy. This paper broadly attempts to provide an understanding of current CSR state of affairs in India and explores the possible future implications of the Companies Bill 2012 on the companies as well as the upon the philosophy of CSR in India.

Keywords


Corporate Social Responsibility, Business, Society, New Companies Bill

References