Now, disaster management, including relief, rehabilitation and reconstruction activities may also be included by companies as a part of their CSR activities

In a recent amendment to Schedule VII of the Companies Act, 2013, which lists out the ‘Activities which may be included by companies in their Corporate Social Responsibility Policies Activities’, the following item and entry has been newly inserted:

“(xii) disaster management, including relief, rehabilitation and reconstruction activities.”

Background: 

According to Section 135 of the Companies Act, 2013 “Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during the immediately preceding financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.” Further, the Corporate Social Responsibility Committee is required to formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company in areas or subject, specified in Schedule VII.

The MCA has clarified that Section 135 and the provisions of the CSR Rules, 2014, is to ensure that while activities undertaken in pursuance of the CSR policy must be relatable to Schedule VII of the Companies Act 2013, the entries in the said Schedule VII must be interpreted liberally so as to capture the essence of the subjects enumerated in the said Schedule. The items mentioned in Schedule VII of the Act, are broad-based and are intended to cover a wide range of activities as illustratively mentioned in theAnnexure.

Source: Ministry of Corporate Affairs

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