Understanding the Companies Act, 2013 - October 31, 2013
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Understanding the Companies Act, 2013 October 31, 2013
Housekeeping
• Place your phone on “mute”
• Use the question box
• #svcfindia
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3
Agenda
1. Introduction
2. Kabir Kumar
3. Dr. Bhaskar Chatterjee
4. Pushpa Aman Singh
5. Q&A
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Speakers
Kabir Kumar Dr. Bhaskar Chatterjee Pushpa Aman Singh
Silicon Valley Indian Institute of GuideStar India
Community Foundation Corporate Affairs
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Evolution of Companies Act
1956 2013
• Definition of public and • New types of companies
private company including one person
• Members and ownership company
• Definition of nonprofit • Increased guidance
company around governance
• Registration guidelines • New audit practices
• Emphasis on reporting
Section 25 company Section 8 company
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Overview of CSR Section
• Eligible companies must spend 2% of average net
profits on CSR activities
• A committee must be formed to oversee these
mandated expenditures
• The committee develops a CSR policy which the
Board signs
• CSR activities must be monitored and reported on
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Is My Company Eligible?
Net worth of Turnover of Rs. Net profit of Rs.
Rs. 500 crore 1,000 crore 5 crore
(US$81M) (US$162M) (US$1M)
Based on revenues generated in India
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Role of the Committee
Policy Activities Monitor Report
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Eligible Activities/Expenditures
10Reporting Requirements
Effective beginning
Annual CSR
FY14-15: Report Report
• CSR must be included
in annual report
materials
• Publish CSR policy
and report activities
online
11Indian Institute of Corporate Affairs Dr. Bhaskar Chatterjee
Dr. Bhaskar Chatterjee
DG&CEO
Indian Institute of Corporate AffairsHighlights of provisions of the Companies Bill Relating to CSR SECTION 135 1) Every company having a net worth of rupees five hundred crore or more (100 million $ or more),or a turnover of rupees one thousand crore or more (200 million $ or more) , or a net profit of rupees five crore or more (1 million $ or more) during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director; 2) The Board's report shall disclose the composition of14 the Corporate Social Responsibility Committee.
SECTION 135 {CONTD.}
3) The Corporate Social Responsibility Committee
shall,
a. formulate and recommend to the Board, a
Corporate Social Responsibility Policy which
shall indicate the activities to be undertaken by
the company as specified in Schedule VII;
b. recommend the amount of expenditure to be
incurred on the activities referred to in clause
(a); and
c. monitor the Corporate Social Responsibility
Policy of the company from time to time. 15SECTION 135 {CONTD.}
4) The Board of every company referred to in sub-section
(1) shall,
a) After taking into account the recommendations
made by the Corporate Social Responsibility
Committee, approve the Corporate Social
Responsibility Policy for the company and
disclose the contents of such Policy in its report
and also place it on the company's website, if
any, in such manner as may be prescribed; and
b) ensure that the activities as are included in
Corporate Social Responsibility Policy of the
company are undertaken by the company. 16
.SECTION 135 {CONTD.}
5) The Board of every company referred to in sub-
section (1), shall ensure that the company spends,
in every financial year, at least two per cent of the
average net profits of the company made during the
three immediately preceding financial years, in
pursuance of its Corporate Social Responsibility
Policy.
17SECTION 135 {CONTD.}
Provided that the company shall give preference to
the local area and areas around it where it operates,
for spending the amount earmarked for Corporate
Social Responsibility activities;
Provided that if the company fails to spend such
amount, the Board shall, in its report made under
clause (o) of sub-section (3) of section 134, specify
the reasons for not spending the amount.
18Sub Section (8) of Section 134
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.
19What is CSR and what is not?
What is CSR? What is not CSR?
It should be rupee measurable; That which is not rupee measurable is
not a CSR activity;
It must bring direct benefits to If it does not benefits the poor &
marginalized , disadvantaged, poor or backward section of the community it is
deprived section of the community/ies; not a CSR activity;
It should not pre-dominantly benefit Employee benefits will not count as
employees of the company; CSR;
20What is CSR and what is not?
What is CSR? What is not CSR?
It can be related to the core business or It must not be part of the core business
the business model. It can thus deliver of the company;
shared value;
The quantum of value in monitoring The total value of the project itself
terms which the target group will derive cannot be shown as CSR;
must be shown and clearly identified;
It must be a sustained activity over a One-of or intermittent activities will not
period of time; count as CSR;
21What is CSR and what is not?
What is CSR? What is not CSR?
CSR activities must be in the form of Pure philanthropy or mere donations
projects/programmes. Thus CSR will not count as CSR
activities should be projectivized ;
Components of a project are as
follows:
•Need Based Assessment/Baseline
Survey/Study
•Clearly identified time frame
•Specific annual financial allocation
•Clearly identified milestones
•Clearly identified & measurable
objectives /goals
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•Robust & periodic review &
monitoringWhat is CSR and what is not?
What is CSR? What is not CSR?
Programmes/projects must be within Programmes/projects undertaken
India; outside India will not count as CSR;
It should be independent of Activities which are in compliance
compliances with any regulation or with any regulation or law will not
law; count as CSR;
Projects/programmes can be taken Projects from CSR activities should
up as social business projects. not be shown as
commercial/business projects.
23GuideStar India Pushpa Aman Singh
Are there enough NGOs in India
• 3.17 million NGOs counted by the
Central Statistical Organisation
• Traced 694,000
• 55,000 unverified NGO records
with the Planning Commission
• 22,735 NGOs filed returns for
foreign contributions
• 4,200 registered on GuideStar
India
25How to identify NGOs partners
*No single registrar/ administrator of charities
*No common accounting standards, reporting guidelines
• Organization Assessment
• Financial & legal compliance
• Transparency in public domain
• Accountability to public
• Good governance practices
• Program Assessment
• Track record (milestones accomplished)
• Who are current supporters
• Reference checks
26How you could engage NGOs
*Giving money is great, give it for high impact
*Give your in-kind resources & expertise: infrastructure, IT, managerial, mentoring,
employee volunteering
• Use intermediaries or co-fund
• Use existing data and credibility information
• Participate in NGO India conference &
exhibition
• Uplift Non profit practice
• Review quarterly/ six monthly
• Demand factual, verifiable public reporting
• Challenge status quo
• Bring your best practices
• Report on challenges and not just highlight
success stories
27Existing Resources
28What NGOs want
*308 NGOs responded to our mailer to give feedback on rules to the Act
*They attend every seminar on CSR to make sense of the “tamasha”
• We have been working with the community
all these years…
• Are we going to get any real support
• Every one wants projects,
who will support organisation development
for greater effectiveness
• Why is our cause not important
• Care for the disabled, elderly
• Every one wants a famous NGO,
near the airport!
• We seek partnerships not vendor contracts
• Please do not waste our time!
• Giving can be cool … enjoy the heat & dust!
29What you could do for great impact
*Giving money is great, give it for high impact
*Give your in-kind resources & expertise: infrastructure, IT, managerial, mentoring,
employee volunteering
• Look for high impact projects
• Catering to underserved areas
• Leveraging government programs
• Invest in the plumbing
• Capacity building of the sector
• Invest in philanthropy infrastructure
• Capacity building of grantees
• Get Involved!
30Thank you!
Pushpa Aman Singh (pushpa@guidestarindia.org)
Founder & CEO
GuideStar India
Call +91-22-26856900 /98/ 99
Visit http://www.guidestarindia.org
Read http://guidestarindia.blogspot.com
Follow http://twitter.com/GuideStarIndia
Like http://www.facebook.com/guidestarindia
Also, visit our portal on giving to
India: http://www.indiagivingnetwork.org
31Q&A
Kabir Kumar Dr. Bhaskar Chatterjee Pushpa Aman Singh
Silicon Valley Indian Institute of GuideStar India
Community Foundation Corporate Affairs
32How SVCF Can Help You
33Resources
34Contact Us
India@siliconvalleycf.org
+1.650.450.5444
siliconvalleycf.org/givingtoindia
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