CSR Enforcement : Corporate Social Responsibility (CSR) in India is governed by the Companies Act, 2013, and is enforced by the Ministry of Corporate Affairs (MCA). The MCA is responsible for monitoring and ensuring compliance with the CSR provisions of the Companies Act.
The legal framework for CSR in India is set out in the Companies Act, 2013. The act requires companies meeting certain criteria to spend at least 2% of their average net profits over the preceding three financial years on CSR activities.
Companies with a net worth of at least INR 500 crore, a turnover of at least INR 1,000 crore, or a net profit of at least INR 5 crore in a financial year are required to comply with CSR provisions.
Companies that fail to comply with CSR provisions can face penalties, fines, and legal action. Directors of the company may also be disqualified from serving on the board of any company.
As per the provisions of the Companies Act, 2013, if a company fails to comply with the CSR spending requirements or fails to transfer the unspent CSR funds to the designated account within the stipulated time frame, it can be punished with a minimum fine of Rs. 50,000 which may increase to Rs. 25 lakh.
Additionally, every officer of such a company who is found to be in default can be punished with imprisonment for a term which may extend up to three years, or with a minimum fine of Rs. 50,000 which may increase to Rs. 5 lakh, or with both.
It is important for companies to comply with the CSR provisions to avoid any legal and financial consequences, as well as to contribute meaningfully to the social and environmental causes.