CEE Jul-Sep-2012

Corporate Social Responsibility PARLIAMENTARY PANEL FOR MANDATORY 2% PROFIT SPEND ON CSR A parliamentary panel has suggested that 2% spending by companies on corporate social responsibility (CSR) activities should be made mandatory in the new Companies Bill to prevent them from escaping the liability by citing one reason or the other. "The Clause (135 of the Companies Bill) seems to provide a security valve for companies by stating. If a company fails to meet the desired standard , it may get away by providing the reason. Such a statement may, in practice , defeat the very purpose of clause 135," the Parliamentary Standing Committee on Finance said. Clause 135 of the Bill prescribes that every company with a net worth of Rs.500 crore or more or turnover of Rs.1000 crore or more, or net profit of Rs. 5 crore and above in a fiscal will have to spend 2 per cent of three years' average profit towards CSR. Courtesy: DNA Mumbai, 09.07.2012. FINANCE PANEL CALLS FOR MANDATORY SPEND ON CSR The standing committee on finance has called for mandatory spending by corporales on corporate social responsibility (CSR) activity in the region they operate. The committee's report on the Companies Bill, 2011 , was tabled in the Lok Sabha and Rajaya Sabha on August 13, 2012. The report had been submitted to the speaker of Lok Sabha on June 26. "...the Committee recommends that Clause 135 (5) of the Bill mandating Corporate Social Responsibility (CSR) be modified by substituting the words "shall make every endeavour to ensure" with the words "shall ensure", the committee said in its report. The Yashwant Sinha-headed committee has also said that CSR activities should be focused on areas where they operated. Clause 135 of the Bill says that every company with a net worth of Rs. 500 crore or more, or turnover of Rs. 1000 crore or more, or net profit of Rs.5 crore and above in a fiscal year will have to spend 2 per cent of its past three year's average profit on CSR activities. "The recommendations have made it mandatory for companies to spend 2 per cent on CSR in a specific local area and related to the company's area of operations," explained Arun Gupta, partner, Corporate Professionals, and added , however, that the committee no longer mentions the disclosures that a company has to make in its directors' report in case it fails to comply. The government is reluctant to make this spending mandatory. The Companies Bill, 2011, introduced in Lok Sabha on December 14, 2011, was referred to the Standing Committee (Finance) for a second review as there were material changes from the first review compl eted in 2010. The committee has also recommended that appointment and tenure of auditors of a company should be ratified by shareholders at every annual general meeting, not favouring a five-year appointment. On the issue of mandatory rotation of auditors, the committee suggested that "the proposal in the Bill for appointment of auditors for five straight years be modified to the extent that the process be subjected to ratification at every AGM." The committee's recommendations are not binding on the government. Corporate affairs Minister Veerappa Moily has said on many occasions that after incorporating the recommendations, the bill is likely to be introduced in the monsoon session. Courtesy: The Economic Times, New Delhi 14.08.2012. . ~ . Latest Adition t~ CMA Library, NOIDA Publications Published/Upgraded by CMA • Basic Data - 2012 Publications procured from Indian Road Congress • Recommendations for Road Construction in Areas applied by Water Logging/Flood (IRC :34 : 11) • Standard Specifications and Code & Practice for Construction of Concrete Roads (IRC :15: 11) • Guidelines for the Design of Plain Jointed Rigid Pavements for Highways- (3rd Edn. IRC :58 : 11) 51 _., \ _ .. ; c