Flexibility to Companies in Designing CSR Activities

I. Corporate Social Responsibility and Sustainability Provision for the Central Public Sector Enterprises

The Department of Public Enterprises (DPE) has issued guidelines on Corporate Social Responsibility (CSR) and Sustainability for Central Public Sector Enterprises (CPSEs) in April, 2013 wherein each CPSE shall, with the approval of its Board of Directors, make a budgetary allocation for CSR and Sustainability activities/projects for the year.  Giving this information in written reply to a question in the Rajya Sabha recently, Shri Sachin Pilot, Minister of Corporate Affairs, said that the budgetary allocation is to be based on the profitability of the company and it is determined by the Profit After Tax (PAT) of the company in the previous year as per the following details:

PAT of CPSE  in the previous year	Range of Budgetary allocation for CSR and Sustainability activities (as % of PAT in previous year)
(i) Less than Rs. 100 crore	3% - 5%
(ii) Rs. 100 crore to Rs. 500 crore	2% - 3%
(iii) Rs. 500 crore and above	1% - 2%

Shri Pilot informed the House that the performance of CPSEs on CSR and Sustainability is evaluated by the DPE through the MoU mechanism signed with the CPSE concerned. The guidelines make it mandatory for all CPSEs to have a two-tier structure, comprising of a Board level Committee headed by either the Chairman and/or Managing Director, or an Independent Director, and a group of officers headed by a senior executive not less than one rank below the Board level.  This two-tier structure is expected to have the authority and influence to be able to move forward the CSR agenda of the company.  The implementation of CSR guidelines is also monitored by the administrative Ministry/Department concerned with CPSEs.  An appropriate mechanism is being developed for reporting.

2. Flexibility to Companies in Designing CSR Activities 

The new Companies Law has a provision in Clause 135 that every company having net worth of Rs. 500 crore or more, or turnover of Rs. 1000 crore or more or net profit of rupees five crore or more during any financial year, shall constitute a CSR Committee to recommend its activities for discharging Corporate Social Responsibility in such a manner that the company would spend at least 2 per cent of its average net profits of the previous three year on CSR activities. Giving this information in written reply to a question in the Rajya Sabha recently, Shri Sachin Pilot, Minister of Corporate Affairs, said that the companies will have latitude in designing project based CSR interventions within the framework of Schedule VII of the new Company Law and the CSR policy of the company. 

3.Action against Companies Based on Investor Grievances

The Ministry of Corporate Affairs has initiated action against 49 companies in 2010-11, 39 companies in 2011-12 and 78 companies in 2012-13 based on investors’ grievances. Giving this information in written reply to a question in the Rajya Sabha recently, Shri Sachin Pilot, Minister of Corporate Affairs, said thatSecurities and Exchange Board of India (SEBI) also initiates action for redressing complaints of non-payment of dividend/ interest on listed securities, pertaining to companies listed with stock exchanges. Companies which fail to pay dividend face action under sections 11B/15C of the SEBI Act, 1992. Details of action taken for non-redressal of investor grievances year-wise, during the last three years in respect of such companies are as follows:

Financial Year	Number of cases where
	Action taken under Section 11	Adjudication
2010-11	18	3
2011-12	11	6
2012-13	04	10

 4. Cases of Embezzlement against Companies 

The number of cases of embezzlement by companies based on complaints received during the period 01-04-2009 to 30-06-2013 are as under:

Period	No. of cases
1-04-2009 to 31-03-2010	06
01-04-2010 to 31-03-2011	06
01-04-2011 to 31-03-2012	13
01-04-2012 to 31-03-2013	45
01-04-2013 to 30-06-2013	55