The Corporate Affairs Ministry has given permission for penal action against 196 companies for violating CSR norms in 2014-15 fiscal, according to Union Minister P P Chaudhary. Under the Companies Act, 2013, certain class of profitable entities are required to shell out at least two per cent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) activities.
“Till date, the Ministry has accorded permission for penal action against 196 companies for financial year 2014-15,” Chaudhary, Minister of State for Corporate Affairs, said in a written reply to Rajya Sabha on Tuesday.
A total of 5,870 companies shelled out 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.
As per the Act, in case a company fails to spend the specified amount, then its board has to provide the specific reasons for the same in the board report. “The number of companies required to make CSR expenditure and who failed to spend any amount for the purpose for 2014-15 and 2015-16 are 8,924 and 10,547 respectively,” the Minister said in a separate reply.
Chaudhary, separately, said action has been initiated against as many as 83 companies in the first nine months of the ongoing financial year for not resolving investors’ grievances. Besides, action has been taken against 145 firms in 2016 -17 and 89 in 2015-16, as per the investors’ grievance data maintained by the Corporate Affairs Ministry.
Companies Act mandates that every company having more than 1,000 shareholders, debenture holders, deposit holders and any other security holders shall constitute a ‘Stakeholders Relationship Committee’ to consider and resolve the grievances of the firm’s security holders. Besides, markets regulator Sebi has also taken action against such companies.