Answer» - Actually, social responsibility is optional. However, business units did not adhere to it. So, in 2013, government through the Companies Act, 2013 enforced social responsibility to be fulfilled by company for some sections of society.
- As per article 135 of Companies Act, 2013, from 1st April, 2014, companies having yearly turnover of more than ₹ 1000 crore and having a net value more than ₹ 500 crore OR having more than ₹ 5 crore profit in the previous financial year will have to mandatorily perform its social responsibility. Such company will have to spend at least 2% of average profit of previous 3 years or of current financial year for activities related to social responsibilities.
- If the company is unable to do so it will have to avoid a valid reason and financial report for company’s inability to spend.
- The Companies Act, 2013 has recommended the companies and large business houses to form a ‘Social responsibility committee’ of at least 3 members in their office who would look after the ways to invest company’s money in fulfilling the task of social responsibility. Moreover, the ministry of Law has emphasized companies to become socially responsible company for a better tomorrow.
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