CB BureauBut surprise, surprise, there is stringent penalty for non-disclosure
In an interesting revelation to CauseBecause, the ministry of corporate affairs, Government of India, has affirmed that there is no mechanism or system in place that will help them evaluate the impact of the corporate social activities of companies. The ministry has said this in a reply to one of the queries filed by Team CauseBecause under Right to Information (RTI) Act.
CauseBecause had asked the ministry if it had developed a mechanism/strategy/plan that would help evaluate the real impact of corporate social activities of every company that fell within the ambit of Section 135 of Companies Act 2013.
In its reply (RTI Registration No. MOCAF/R/2015/60791) via letter dated 16 September 2015, the ministry said, ‘No mechanism exists in the Ministry to evaluate the real impact of Corporate Social activities of every company that falls in the ambit of Section 135. Under the provisions of Section 135 of the Act, the Board and the CSR Committee is to formulate and recommend a CSR Policy, including the activities to be undertaken by the company with allocation of funds across activities. The Committee is also responsible for monitoring implementation of CSR policy from time to time.’
CauseBecause had also requested the ministry to share in detail the mechanism/strategy/plan – along with the names of individuals who had developed it, with details of their designations and qualifications. However, since there is no mechanism, there obviously has been no response on this query.
Penalty clause – Section 134 (8)
Reverting on the CauseBecause query on whether there is a provision of penalising companies for noncompliance, the RTI reply reads: ‘The Board’s Report of the company which falls under the ambit of CSR provision of the Act are required to disclose its compliance in its Annual Return on CSR in its Board Report under Section 135 (4) of the Act. The Contravention to non-disclosure in this regard is prescribed under Section 134 (8) of the Companies Act 2013.’
Interestingly, Section 134 (8) mentions strict penalty provisions. It states: ‘If a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.’
CauseBecause had requested the ministry to share some benchmark CSR case studies that it considered to be appropriate references for companies in India while conceptualising their CSR programmes. The ministry, however, did not revert on this query and stated that such information would be available only after the first set of annual reports on CSR were filed with the ministry.
Ongoing action
Team CauseBecause in association with several domain experts have formulated parameters to measure the impact of CSR activities in various fields. An important aspect of this will be visiting the project sites by CauseBecause representatives, interactions with implementing agencies at the grassroots, and direct interviews with project beneficiaries.