Recently, major countries around the world are strengthening CSR through various methods, including explicit institutionalization of corporate social responsibility (CSR). In India, CSR activities were legislated in 2014, and penalties related to CSR obligations have been included since July this year. As a result, companies that have entered or intend to enter India should identify them in advance and find ways to respond to them.
“ India is the first in the world to implement a mandatory CSR law, ” said You Ji-hye, a lawyer and CEO of Buddtree Management in India , at the ‘ Indian CSR Mandatory Act Amendment Briefing ’ held by KOTRA on the 27th . “We have recently introduced punitive provisions for companies that violate their CSR spending obligations.” “As a result, our companies entering the market need to be careful, ” he said .
Corporate CSR (Corporate Social Responsibility) is a series of stakeholder-based management activities promoted by direct and indirect stakeholders who are affected or influenced by corporate activities to meet the social obligations required of the company.
In India, it is mandatory for companies to spend 2% of their net profits on CSR.
India is emerging as a world factory after China. It is Korea's 11th largest trading partner and 7th largest export partner. Recently, trade volume has steadily increased and the number of companies entering the market has been increasing. As multinational companies enter the country more actively, Indian authorities are strengthening CSR in the country.
The Indian government added provisions for disclosure and mandatory CSR activities in Article 135 of the Companies Act in 2014. It is mandatory for companies to spend 2% of their net profits on CSR. Companies subject to CSR obligations are any of the following : ▲ net assets of 5 billion rupees ( about 80 billion won ) or more , ▲ total sales of 10 billion rupees ( 160 billion won ) or more , and ▲ net profits of 50 million rupees ( 80 billion won ) or more .
The company establishes a CSR committee composed of directors, and the CSR committee establishes a CSR policy and recommends it to the board of directors. In accordance with the CSR policy, the costs required for CSR activities must be proposed to the board of directors and the CSR policy must be constantly supervised.
The Board of Directors must spend at least 2% of the average net profit of the last three fiscal years on CSR activities , and must prioritize spending on nearby areas or business activity areas. If expenditure is not made, the reason must be specified in the Board of Directors report .
Starting in July of this year , punishment for companies and executives will be implemented for non-compliance with CSR obligations.
The Company Act, revised in July of this year , strengthened regulations by providing punishment provisions for failure to fulfill CSR obligations . If a company has not spent its CSR obligations and has no ongoing CSR projects, it must make contributions to a specific fund within 6 months from the end of the fiscal year .
If a company has not spent its CSR obligations and has an ongoing CSR project, this amount must be paid into the designated bank account within 30 days from the end of the fiscal year and must be disbursed within 3 years from the date of deposit in accordance with the company's CSR policy . If not implemented, this amount will be transferred to a specific fund within 30 days from the end of the third fiscal year .
Sanction provisions for non-compliance with CSR obligations were also added . If the CSR policy is not detailed in the board of directors' report or if the company does not fulfill its obligation to spend profits for CSR activities, the company will be fined 50,000 to 25 billion rupees ( 8 to 400 billion won ) . You may be imprisoned for up to a year or fined 50,000 to 500,000 rupees (800,000 to 800,000 won ) . On the other hand , there are no tax benefits for CSR expenditures.
Limited CSR activities recognized under the Company Act ... Need to discover CSR
CSR activities recognized under the Company Act are limited . CSR activities recognized by the Company Act are ▲ poverty eradication and public health promotion ▲ education and livelihood improvement projects ▲ promotion of rights and interests of women and the underprivileged ▲ ensuring environmental sustainability and ecological balance ▲ promotion of artistic activities such as restoration of cultural heritage ▲ support for the welfare of war veterans and their families ▲ sports These include training support , ▲ contribution to the national relief fund , ▲ participation in the technology business incubator fund , ▲ rural development projects, development of slum areas , and disaster relief .
Voluntary participation activities such as contributions in kind or volunteer work by companies and employees are not recognized as CSR activities.
There are three ways to use CSR funds: directly by companies, through contributions from the central government, or through NGOs . In the case of small and medium-sized businesses, several companies can gather together and create a common fund to operate CSR .
Attorney Yoo said that when using CSR funds through the government, there are many restrictions on using them through the state government, so they must be used through the central government . He went on to advise that, as CSR activities are limited, companies need a program to systematically establish and operate CSR plans, and that they need to focus on discovering creative CSR . Reporter Chae Min-seon, Medium Economy.
Reporter Chae Min-seon ( iscra79@junggi.co.kr )
