New Delhi, Jul 10: Government plans to institute awards for corporate social responsibility (CSR) activities across sectors as part of efforts to incentivise companies to take up work towards social welfare. The Corporate Affairs Ministry, which is implementing the Companies Act, is working on the idea of having such awards.
Under the Act, a certain class of profitable companies is required to shell out at least 2 per cent of their 3-year average annual net profit towards CSR works. Officials said the ministry is proposing to institute the awards for CSR activities across eight sectors, including education, health and environment.
The aim is to incentivise companies to carry out more CSR works that can help in overall development activities, they added. "We are planning to set up the awards in the current financial year," an official said. As per the plan, eight sectors will be chosen and there be three awards for each of them.
One will be for public sector companies and two for private firms. The private companies will be classified on the basis of annual profit -- those having Rs 5 crore or more and entities having less than that level. As per the Companies Act, 2013, each entity having a net worth of at least Rs 500 crore, minimum turnover of Rs 1,000 crore or a net profit of Rs 5 crore or more are required to spend on CSR.
The norm came into effect from April 1, 2014. In case of non-spending, the company concerned is required to provide reasons for the same to the ministry. Such companies will also have to constitute a CSR committee of their respective board of directors.
This panel will formulate and recommend to the board CSR activities that can be taken up by the firm. In March this year, Corporate Affairs Minister Arun Jaitley had said as many as 460 listed firms had disclosed spending of Rs 6,337.36 crore towards CSR activities in 2014-15.