- April 18, 2020
- Posted by: IBA LLP
- Category: Legal & Regulatory, Updates
“We at IBA are doing our bit directly through our active involvement and contributions; and indirectly by assisting companies in identifying the areas of assistance and handholding them e.g assistance in procurement and ensuring last mile dissemination of COVID kits; assistance in design, procurement and dissemination of safety kits for Companies’ employees and stakeholders; assistance in creating strategy for maximum impact while ensuring compliance”
Corporate Social responsibility is an initiative by the government of India, implemented by way of the provisions laid down in the Companies Act, 2013. It requires all eligible companies i.e. Companies having net worth of at least rupees five hundred crore or more, or turnover of at least rupees one thousand crore or more or at least a net profit of rupees five crore during the immediately preceding financial year to contribute 2% of the average net profits of the company made during the three immediately preceding financial years in accordance with the company CSR policy. The Ministry of Corporate Affairs has defined certain activities in Schedule VII of the Companies Act, 2013 which can be included by companies in their CSR activities like promoting education, eradicating poverty etc.
Amidst the out break of novel Corona Virus i.e. COVID 19, its declaration as pandemic by the World Health Organisation (WHO) and continuation of the lock-down owing to its contagious nature, the Government of India has set up the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ (PM CARES Fund) with the main objective of dealing with any kind of emergency or distress situation such as that posed by COVID 19 pandemic. It was further declared by the government that any such contribution made to PM CARES Fund shall also form part of CSR expenditure as enumerated in the Companies Act, 2013.
The government has further by way of a circular dated April 10, 2020 clarified various points regarding which donations made for COVID 19 shall qualify as the CSR expenditures by way of FAQs. The link of said circular is http://www.mca.gov.in/Ministry/pdf/Notification_10042020.pdf
Even though contribution made to ‘PM CARES Fund’ and ‘State Disaster Management Authority’ qualifies as CSR expenditures, it is important that corporates intending to make real difference step up in this need of the hour by not only making monetary contributions to various funds of the government but also assisting in more direct ways like donating directly or through NGOs for providing meals, masks, testing kits, arranging mental wellness sessions for employees, developing software for governments to implement various schemes etc.