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Recently CSR Rules have been amended. By the way of an amendment to Company law, Finance Minister Nirmala Sitharaman has passed a specific reform to ensure more transparency and also strengthen the company regulation and accountability of the organization. The bill was passed to avoid the violation of the Corporate social responsibility and could land company officials in jail for up to 3 years. The bill advocates that the company will have to give entire details about the spending of money and also the company cannot get away without meeting the corporate social responsibility requirements.
The full form of CSR is Corporate Social Responsibility. CSR is the compliance for eligible business organizations that aims to create socially accountable business entities. In CSR, a company makes initiative to enhance society and the environment. CSR programs, philanthropy events, and volunteer efforts are major channels of CSR implementation.
Businesses can benefit the society while boosting their brand presence through various activities during the implementation of CSR policy. CSR works on the policy that the more visible and successful the organization is, the more responsibility it has, to set standards of ethical behavior for its transparency, competition, and the industry.
The activities/programs/events that benefit only the
employees of the company and their families shall not be considered as a part
of CSR. Further as per section 135 of the Act following activities is not
considered as CSR activities;
Also Read: Applicability of CSR Under Companies Act 2013
All the companies falling in any of the below-mentioned categories are required to spend 2% of their average profit of the previous 3 years on CSR activities every year.
Physical verification of companies is important, as many
companies are reportedly /operating from a single room. Now it has become
mandatory that companies have a physical address.4
The government has tightened the CSR Rules for companies. The success of the company depends on what the general public thinks about the company. CSR includes the business practices that uplift and incorporates the sustainable development into company’s business model. which as a result provides opportunity to the companies to demonstrate their good corporate citizenship and helps in risk management by protecting the company from the outside risks. As per the latest amendment, the corporates must meet all the social responsibility requirements.
Note:- As per a senior Government Official these changes will not be commenced until the government fully analyse these amendments and pass any final comment. These amendment rules were considered for further discussion because it was facing a sharp criticism from the corporate sectors.
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