Rules to provide broad canvas for CSR activities: MCA

CSR activities are going to get a lot of goodwill for companies that cannot be garnered by way of sponsorships, says Sachin Pilot

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With the new Companies Act requiring entities to spend on social welfare activities, the government is working on rules that would provide a broad canvas for CSR activities rather than addressing issues in a micro manner.

The rule-making committee, set up by the Corporate Affairs Ministry, is expected to come out with draft norms soon for the new Companies Act.

"We want to keep the canvas (for CSR activities) as wide as possible (in the beginning)," Corporate Affairs Minister Sachin Pilot said today while emphasising that rules are being made in an open and transparent manner.

Speaking at a conference organised by finance company IDFC, Pilot said that CSR activities are going to get a lot of goodwill for companies that cannot be garnered by way of sponsorships.

The new legislation, which has received the President's assent, require certain class of companies to spend at least two per cent of their three-year annual average profit towards Corporate Social Responsibility (CSR) activities. If the companies are unable to shell out the required amount, they would have to provide reasons for the same.

Noting that the law would not be successful without the participation of corporates, Pilot said "objectives should be less philosophical and more practical".

Indian Institute of Corporate Affairs' (IICA) Nikhil Pant said the rules would not be trying to define things in a micro way.

Pant is the Chief Programme Officer of National Foundation for CSR, under the IICA and the latter is playing an active role in preparing the rules.

Social activist Rohini Nilekani said that CSR being part of legislation would help in socialising the idea that companies cannot be separate from the society in their actions.

In this 21st century, the business side of things (bazaar side) should benefit the "samaaj" and it cannot be separate, she added.