By Aashi Sehrawat
Ministry of Corporate Affairs has given consent for penal action against
196 companies for failing to comply with CSR Norms (under the Companies Act) in
2014-15 fiscal, according to Union Minister P P Chaudhary.
Corporate Social Responsibility (CSR) is a form of corporate
self-regulation integrated into a business model. CSR policy functions as a
self-regulatory mechanism whereby a business monitors and ensures its active
compliance with the spirit of the law, ethical standards and national or
international norms.
Under the Companies Act, 2013, certain class of profitable entities are
required to shell out at least two per cent of their three-year annual average
net profit towards Corporate Social Responsibility (CSR) activities. If the
company fails to do so, then its board has to provide specific reasons for the
same.
Minister of State of Corporate Affairs, P P Chaudhary, said in Rajya Sabha
that till date, the ministry has accorded permission for penal action against
196 companies for the year 2014-15. He also added that the number of companies
required to make CSR expenditure and who failed to spend any amount for the
purpose for 2014-15 and 2015-16 are 8,924 and 10,547 respectively. Action has
been initiated against as many as 83 companies in the first nine months of the
ongoing financial year for not resolving investors' grievances, the minister
says separately.
Besides, market regulator SEBI has also taken action against such
companies.
The latest amendments to the Companies Act, approved by Parliament, would also
help in ensuring a more strict regulatory framework.
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