CSR, Law, Sustainable Development, Uncategorized

CSR News: India sets up New Law on Social Responsibility

India has seized the initiative to promulgate a law, making corporate social responsibility mandatory for corporate organisations. This is a major step by the country, in light of the prevailing situation operative in other countries of the world, whereby companies are left to exercise CSR at their discretion. Though CSR is gaining popularity all over the world, countries have not seen the need to codify CSR into law.
Now, companies in India have to match the efforts of the State and Non-Governmental Organizations (NGOs) in initiating activities for the economic growth of the underprivileged and similarly marginalized groups as well as social causes such as animal welfare and environment.
From April 1, 2014, it has become legally binding for companies in India to be “socially responsible.”
Section 135 of the new Companies Act 2013, reads that the CSR Rules makes it mandatory for companies, meeting certain criteria, to set aside two per cent of their net profits for undertaking and promoting socially beneficial activities and projects in India. To implement this, the Ministry of Corporate Affairs (MCA) recently issued the CSR Rules, 2014, to implement this legislative mandate, which came into effect on April 1, 2014.
Every company with a net worth of at least Rs 500 crore, or a minimum turnover of Rs 1,000 crore, or a minimum net profit of Rs 5 crore (approx. $1 million), has to constitute a CSR committee dedicated to undertake initiatives such as promoting women’s empowerment, improving maternal health, education, gender equality or ensuring environmental sustainability.
Commentary:
This is a great step in the right direction and a catalyst for development. Developing Countries should look in this direction.

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