I learned about India’s new bill on my trip there in February from our lawyers. I’m really surprised more people aren’t covering this. The bill basically mandates that companies spend some of their profit on charitable work.
Here’s a summary from Payal Shah of Acumen, and a link to the full article on Next Billion.net:
The Indian parliament is currently in the process of passing this bill, which will make it compulsory for companies of a certain size to dedicate 2 percent of their profits toward CSR activities. Specifically, the “Companies Bill” states:
- All companies with revenue greater than Rs. 1000 Cr ($200 million) or profits of 5 Cr ($1M) must spend 2 percent of the average of the last three years’ profits, towards CSR activity
- Boards of affected companies must designate a three-member CSR committee (including one independent director) to ratify decisions on spending
- Employee expenses will not be classifiable as CSR spending
- Poverty alleviation, health care, education and social business ventures have all been included as potential areas of investment
- If the 2 percent allocation is not made in a given fiscal year, the CSR committee would have to submit an explanation for why that has occurred to avoid being penalized
What do you think?