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PRESENTATION ON THE COMPANIES ACT, 2013 CSR & PENALTIES

PRESENTATION ON THE COMPANIES ACT, 2013 CSR & PENALTIES. By DR. S.D. ISRANI, Advocate & Sr. Partner SD Israni Law Chambers ICAI Seminar at Kandivali, Mumbai on Sunday, 27 th April 2013. THE COMPANIES ACT, 2013.

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PRESENTATION ON THE COMPANIES ACT, 2013 CSR & PENALTIES

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  1. PRESENTATION ON THE COMPANIES ACT, 2013 CSR & PENALTIES By DR. S.D. ISRANI, Advocate & Sr. Partner SD Israni Law Chambers ICAI Seminar at Kandivali, Mumbai on Sunday, 27th April 2013

  2. THE COMPANIES ACT, 2013 Today’s business leader cannot justify his existence by profit statements alone. He must also render service to his local, national and world community. • DOROTHY SHAVER

  3. THE COMPANIES ACT, 2013 COPORATE SOCIAL RESPONSIBILITY (CSR)

  4. THE COMPANIES ACT, 2013 CSR VOLUNTARY GUIDELINES, 2009

  5. THE COMPANIES ACT, 2013 Core Elements • Care for all Stakeholders • Ethical functioning • Respect for Workers' Rights and Welfare • Respect for Human Rights • Respect for Environment • Activities for Social and Inclusive Development

  6. THE COMPANIES ACT, 2013 COMPANIES ACT, 2013 & CSR

  7. THE COMPANIES ACT, 2013 S. 135 • Every company having net worth of Rs. 500 crores or more, or • Turnover of Rs. 1000 crores or more or • A net profit of Rs. 5 crores or more • During any financial year

  8. THE COMPANIES ACT, 2013 To constitute a Corporate Social Responsibility (CSR) Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director. Holding Co., Subsidiary Co., Foreign Co. having branch in India.

  9. THE COMPANIES ACT, 2013 The Board's report under sub-section (3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee.

  10. THE COMPANIES ACT, 2013 The CSR Committee shall,— • (a) formulate and recommend to the Board, a CSR 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 CSR Policy of the company from time to time.

  11. THE COMPANIES ACT, 2013 The Board shall,— after taking into account the recommendations made by the CSR Committee, approve the CSR Policy for the company and disclose contents of such Policy in its report and also place it on the company's website, in such manner as may be prescribed;

  12. THE COMPANIES ACT, 2013 The Board shall ensure that,— • the activities as are included in CSR Policy of the company are undertaken by the company. • 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 CSR Policy.

  13. THE COMPANIES ACT, 2013 Schedule VII CSR Activities

  14. THE COMPANIES ACT, 2013 • (i) eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and making available safe drinking water; • (ii) promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects.

  15. THE COMPANIES ACT, 2013 • (iii) promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centers, and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;

  16. THE COMPANIES ACT, 2013 • (iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintain quality of soil, air and water;

  17. THE COMPANIES ACT, 2013 • (v) protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts;

  18. THE COMPANIES ACT, 2013 • (vi) measures for the benefit of armed forces veterans, war widows and their dependents; • (vii) training to promote rural sports, nationally recognized sports, paralympic sports and Olympic sports;

  19. THE COMPANIES ACT, 2013 • (viii) contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;

  20. THE COMPANIES ACT, 2013 • (ix) contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government; • (x) rural development projects

  21. THE COMPANIES ACT, 2013 • Preference to the local area and areas around it where it operates, for spending the amount earmarked for CSR activities. • If the company fails to spend such amount, the Board to mention the dame in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount.

  22. THE COMPANIES ACT, 2013 IMPLEMENTATION OF CSR ACTIVITIES

  23. THE COMPANIES ACT, 2013 TRANSPARENT MONITORING MECHANISM CSR REPORTING ANNUAL REPORT IN THE BOARD’S REPORT

  24. THE COMPANIES ACT, 2013 WHEN CAN A COMPANY BE EXEMPTED FROM THE APPLICABILITY OF THE PROVISIONS OF S.135

  25. THE COMPANIES ACT, 2013 The making of money, the accumulation of material power, is not all there is to living. Life is something more than these, and the man who misses this truth misses the greatest joy and satisfaction that can come into his life – service for others. • EDWARD W. BOK

  26. THE COMPANIES ACT, 2013 Offences And Penalties

  27. THE COMPANIES ACT, 2013 Many fold Increase in Fine More sections have minimum Fine provision Fines range from Rs. 5000 to Rs. 25 crore and more

  28. THE COMPANIES ACT, 2013 Cognisance of Offences

  29. THE COMPANIES ACT, 2013 Section 439 Section 621 (Old)

  30. THE COMPANIES ACT, 2013 Registrar Shareholder Person authorised by the Central Government SEBI

  31. THE COMPANIES ACT, 2013 Composition of offences

  32. THE COMPANIES ACT, 2013 Section 621A (Old) Section 441 (New- NE) Compounding of Offences

  33. THE COMPANIES ACT, 2013 Compoundable Offences

  34. THE COMPANIES ACT, 2013 Three kinds of offences are permitted to be compounded under the Act

  35. THE COMPANIES ACT, 2013 Offences which are punishable with fine only

  36. THE COMPANIES ACT, 2013 Offences which are punishable with imprisonment or fine.

  37. THE COMPANIES ACT, 2013 Offences which are punishable with imprisonment or fine or both

  38. THE COMPANIES ACT, 2013 Non – Compoundable An offence punishable with imprisonment only or with imprisonment and fine is not compoundable

  39. THE COMPANIES ACT, 2013 CLB to compound offences without any limit

  40. THE COMPANIES ACT, 2013 Fine Below Rs. 50000 may be compound by Regional Director

  41. THE COMPANIES ACT, 2013 Similar offence committed within a period of three years not compoundable.

  42. THE COMPANIES ACT, 2013 Offences punishable with imprisonment or fine or both prosecution before the Magistrate

  43. THE COMPANIES ACT, 2013 Effect of compounding of an offence

  44. THE COMPANIES ACT, 2013 no prosecution can be launched in relation to such an offence.

  45. THE COMPANIES ACT, 2013 prosecution is pending shall be discharged by the court.

  46. THE COMPANIES ACT, 2013 Where the offences which can be compounded only with the permission of the court, the composition thereof shall have the effect of acquittal of the accused

  47. THE COMPANIES ACT, 2013 Period of Limitation

  48. THE COMPANIES ACT, 2013 S.468 Code of Criminal Procedure Period of limitation

  49. THE COMPANIES ACT, 2013 Six months if the offence is punishable with fine only

  50. THE COMPANIES ACT, 2013 One year if the offence is punishable with imprisonment for a term not exceeding one year

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