NEW DELHI: The government is considering to make it mandatory for all companies to invest 2% of their net profit in corporate social responsibility (CSR). The ministry of corporate affairs plans to incorporate it in the new Companies Bill, an official in the ministry said. The oil ministry has already made it mandatory for state-run oil companies such as ONGC , IOC , BPCL and HPCL .
The proposal of the ministry is tabled in the Parliamentary Standing Committee. It will be debated threadbare as private companies have opposed the idea of any mandatory social spending limit. They want the contribution to remain voluntary.
“Every year at least 2% of its (companies’) average net profits during the three immediately preceding financial years shall be spent on CSR activities,” the ministry said in an statement.
The new provisions may apply to companies having a net worth over Rs 500 crore, or a turnover over Rs 1,000 crore, or a net profit of over Rs 5 crore in a year. While the idea to mandate a minimum spending on CSR front is still being debated, what appears certain is that companies will have to make specific disclosures of their social spends in their annual report.
The proposal of the ministry is tabled in the Parliamentary Standing Committee. It will be debated threadbare as private companies have opposed the idea of any mandatory social spending limit. They want the contribution to remain voluntary.
“Every year at least 2% of its (companies’) average net profits during the three immediately preceding financial years shall be spent on CSR activities,” the ministry said in an statement.
The new provisions may apply to companies having a net worth over Rs 500 crore, or a turnover over Rs 1,000 crore, or a net profit of over Rs 5 crore in a year. While the idea to mandate a minimum spending on CSR front is still being debated, what appears certain is that companies will have to make specific disclosures of their social spends in their annual report.
with thanks : Economic Times : link above for more detailed news.
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