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Decriminalisation of CSR Violation

  • 24 Aug 2019
  • 2 min read

Finance Minister has announced that corporate social responsibility (CSR) violations would not be treated as criminal offences and would instead be a civil liability.

    • The imprisonment of up to 3 years for officials of companies that fail to comply with the specified corporate social responsibility (CSR) expenditure has been rolled back.
    • Recently, Injeti Srinivas panel had been set up to study CSR expenditure.
    • Implications of decriminalisation of CSR Violations:
      • It will allow the corporations to think and employ their CSR funds in an effective way.
      • Freedom to decide and choose the field of CSR related work for corporations.
    • Recently, Parliament passed amendments to the Companies Act, 2013 which includes:
      • Unspent CSR funds by companies should be transferred into an escrow account called Unspent Corporate Social Responsibility Account.
      • The transferred funds needs to be utilised within three years of transfer.
      • Any unspent annual CSR funds must be transferred to one of the funds under Schedule 7 of the Companies Act like Prime Minister’s Relief Fund within six months of the financial-year end.
  • Corporate Social Responsibility
    • Under the Companies Act, 2013, certain classes of profitable entities are required to spend at least two per cent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) in a particular financial year.


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