August 14, 2019

No Jail If CSR Norms Are Not Implemented: Government Clarifies After Behind The Scenes Lobbying By India Inc

[ By Bobby Anthony ]


The government has clarified that a recently amended provision of the Companies Act will not be implemented after desperate behind the scenes lobbying by a panic-stricken corporate India.

According to the amended provisions, violations of corporate social responsibility (CSR) norms attract jail terms.

The clarification has come after recommendations by a high-level committee on CSR which submitted its report recently to Union Finance Minister Nirmala Sitharaman.

Instead of jail terms, it has been clarified that violations of CSR norms would be regarded merely as civil offences which are liable to be punished with monetary penalties.

In this connection, it may be recalled that the Companies Act was amended during the recent budget session to provide for imprisonment of up to three years for executives of companies which violated CSR rules, besides fines of Rs 50,000 to Rs 25 lakh.

These provisions in the recently amended Companies Act, besides introduction of specific penalties for violations led to panic among industry leaders, who hectically lobbied for a rollback.

Other recommendations by the high-level committee on CSR include coverage of banks and limited liability partnerships by a mandatory CSR expenditure framework.

Also prescribed is the inclusion of sports promotion, senior citizens’ welfare, welfare of differently abled persons, disaster management and heritage protection under permitted CSR activities.

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