Little more nudging needed to ensure CSR norms compliance: Official

NEW DELHI: When it comes to comply with corporate governance and CSR spending norms, the government feels there is a need for "little more nudging and prodding", according to a senior official.

Under the Companies Act, 2013 -- which is implemented by the corporate affairs ministry -- there are strict norms for ensuring good corporate governance practices besides requiring certain class of profitable companies to shell out a minimum amount towards CSR activities.

The provisions related to Corporate Social Responsibility (CSR) came into effect from April 1, 2014.


Corporate Affairs Secretary Injeti Srinivas told PTI that there should be more appetite for compliance when it comes to corporate governance and CSR requirements under the Act.

Without divulging any specific plans, he said the ministry would like to remind companies about not being compliant.

"On corporate governance and CSR, we feel there is a need for little more nudging and prodding. There should be more appetite for compliance. We will certainly like to remind the non-compliant companies that you are not complying," he said.

There have been concerns about corporate governance practices in the wake of certain instances in recent times.

The latest amendments to the Companies Act that have been approved by Parliament would also help in ensuring a stricter regulatory framework.

According to Srinivas, the amendments will bring about some far reaching changes and many would contribute towards the ease of doing business.

"At the same time, there is also strengthening of provisions relating to areas such as identification of mismanagement, fraud detection, disclosures and related party transactions," he said.

With respect to Corporate Social Responsibility (CSR), the ministry has come across various instances of non- compliance.

Certain class of profitable entities are required to shell out at least two per cent of their three-year annual average net profit towards CSR activities.

In case a company fails to spend the specified amount then its board has to provide the specific reasons for the same in its report.

Earlier this month, the ministry informed the Lok Sabha that it has given permission for penal action against 187 companies for violating CSR norms in 2014-15 fiscal.

Companies spent Rs 9,553.72 crore towards CSR activities in 2014-15 while the number of such firms and total money spent rose in the next fiscal.

In 2015-16, as many as 7,983 companies incurred CSR expenditure of Rs 13,625.24 crore, as per official data.