CORPORATE SOCIAL RESPONSIBILITY (CSR) UNDER COMPANIES ACT, 2013 (PART III)

[Dr. Sanjiv Agarwal]

Schedule VII of the Act

A list of CSR projects or programs specified in Schedule VII of the Act specifying modalities of execution, implementation and monitoring process of such projects or programs, provided it does not include activities undertaken in pursuance of normal course of business.

• Monitoring process of such projects or programs:

• Provided that the CSR activities does not include the activities undertaken in pursuance of normal course of business of a company
• Provided further that the Board of Director shall ensure that activities included by a company in its CSR Policy are related to the activities included in the Schedule VII of the Act.

According to section 135(3) (a), CSR Policy shall indicate the activities to be undertaken by the company as specified in Schedule VII.

Accordingly, Schedule VII of the Act as amended by Notification No.GSR E 130 dated 27/02/2014 w.e.f. 01.04.2014, specifies the following activities which may be included in company's CSR Policy. These activities may relate to one or more of the following activities which may be included on company's CSR policy. These activities may relate to one or more of the following:

1. Eradicating hunger, poverty and malnutrition promoting preventive health care  and Sanitation and making available safe drinking water;
2. Promoting education. including special education and employment enhancing vocation skills especially among children women, elderly, and the differently abled and livelihood enhancement projects;
3. Promoting gender equality, empowering women setting up homes and hostels for women and orphans; setting up old age homes, day care centers and such other facilities for senior citizens and measures for reducing inequalities face by socially and economically backward groups;
4. Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agro forestry, conservation of natural resources and maintaining quality of soil, air and water;
5. Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries: promotion and development of traditional art and handicrafts; ,
6. Measures for the benefit of armed forces veterans, war widows and their dependents;
7. Training to promote rural sports, nationally recognized sports, paralympic sports and Olympic sports;
8. Contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes other backward classes, minorities and women;
9. Contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government;
10. Rural development projects.

Few Examples

Health Services

The company may provide funds to the trust who seeks to provide medical assistance by way of providing ambulance etc., arranging medical treatments in public and private hospitals at discounts, organizing regular medical checkup camps etc.

As per Oxford dictionary, healthcare means the maintenance and improvement of physical and mental health, especially through provision of medical services.

As per Wikipedia, healthcare is the diagnosis, treatment and prevention of disease, illness, injury and other physical and mental impairments in humans.

The above mentioned activities may fall under S.No.(i) of Schedule VII of The Companies Act,2013 which reads as  follows :

1. eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and making available safe drinking water."

Going by strict interpretation of the above entry, the health services undertaken by the trust seem to promote preventive healthcare.  The activities undertaken by the trust including provision of medical treatments at discounted rates and holding regular check up camps clearly fall under preventive healthcare.

If the same is done for the members as well as non members of the trust who are senior citizens, it will qualify under S. No. (i) of Schedule VII.

Cultural Services:

The company may provide funds to the trust which may hold the following cultural activities for senior citizens :

1. cultural events for enhancing education
2. cultural events for entertainment of elderly

The cultural events held for enhancing education shall fall under S. No. (ii) of Schedule VII of The Companies Act , 2013 which reads as under :

2. promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects

The S.No (ii) of Schedule VII specify that activities which promote education and vocation skills among children, women and elderly shall tantamount to eligible CSR expenditure.

The cultural events held for enhancing education among the senior citizens may fall under the abovementioned head.

However, on a strict interpretation, organizing cultural events for entertainment of the elderly may not fall under any category and may not be eligible under CSR activities as specified under Schedule VII.

Other Services

The company may directly engaged in or provide funds to a trust which undertakes the following activities for senior citizens which are members of the trust :

1. Providing safety and security services in association with Police.
2. Providing legal help whenever necessary.

The safety and security services as well as legal services to elderly do not clearly fall under any head of Schedule VII. However, it may fall under S. No. (iii) of Schedule VII of The Companies Act,2013 which reads as under :

3. promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups.

The nature of activities covered under S.No. (iii) of Schedule VII of Companies Act,2013 consist of empowering women, promoting gender equality and other related activities. Though the services of providing safety and legal services to senior citizens may not fall under such head . However, these activities may be construed as activities for empowering and protection of senior citizens and may fall under “other such facilities for senior citizens”.