CSRming the fightback

The quick evolution of corporate social responsibility regulations played a crucial role in helping companies fight the pandemic. Nitin Mittal explains how legal teams rose to the challenge

CCorporate Social Responsibility (CSR) was once relegated to a quiet backwater of the company annual report. Either particular projects were dear to the heart of someone high in the company, or the company found that it was good publicity to adopt the guise of a good corporate citizen. But even adopting a low-visibility approach, a company might find itself fending off disgruntled shareholders at the annual general meeting who demanded that all profit be returned to the owners – those, of course, being themselves. Gradually, the use of company income for CSR projects became subject to legislative control to ensure that funds spent did not raise concerns about conflicts of interest.

The spread of covid-19, however, with its unprecedented challenges and disruptions to normal life, has seen CSR being used increasingly to support official relief measures, or even to fill gaps where public services have been overwhelmed. Such a change to the role of CSR has posed particular challenges to in-house legal departments and private practitioners supplying legal services to businesses.

The Companies Ordinance, 2013 (Act), was a significant consolidating measure. As subsequently amended, under section 135, any company with net worth of at least INR5 billion (USD67 million) and turnover of INR10 billion or more, or making a net profit of INR50 million or more in any financial year, has to establish a CSR committee from the board.

Nitin Mittal is general counsel, India and Pacific Cluster, and Harvinder Kumar is manager, compliance and assistant company secretary at Signify India