(LiveMint)
In what may be a huge relief for companies, defaults on corporate social responsibility (CSR) obligations will not be treated as a criminal offence. Minister of finance and corporate affairs Nirmala Sitharaman on Friday said that corporate social responsibility-related violations will be considered a ‘civil liability’, instead of being treated as a ‘criminal offence’.
“Ministry of corporate affairs will review the sections under the Companies Act. The government has provided companies, through revised orders, time for completing ongoing projects towards fulfilling their CSR obligations,” she said. Any changes in the provisions will require further amendments to the Companies (Amendment) Act.
According to the law, every company with a net worth of Rs. 500 crore or more, or sale of Rs.1,000 crore or more, or net profit of Rs. 5 crore or more, in a fiscal year are required to spend at least 2% of their average net profit of the last three fiscal years on corporate social responsibility activities. It includes initiatives that would have social, economic and environmental impact, or a way to give back to the society.
