NEW DELHI: Corporates can implement social welfare spending activities, as part of the new companies law, through the trusts and societies established by them or similar agencies with proven track record.
Certain class of profitable companies are now required to spend at least two per cent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) activities under the new Companies Act.
Corporate Affairs Minister Arun Jaitley today said that CSR rules were finalised after consultation with various stakeholders including civil society.
"Companies are free to implement their CSR policy through Trusts or Societies or Section 8 companies (Section 25 companies under the Companies Act 1956) floated/established by them.
"Alternatively, they can get their CSR policy implemented through similar agencies with three years' proven track record," he told the Lok Sabha in response to queries on the issue.
Foreign companies would also come under the ambit of CSR. A corporate, which falls under CSR norms, is required to set up a CSR committee. Those entities, having only two directors, would have to establish the panel with those individuals.
The Minister also said the Corporate Affairs Ministry has issued a series of clarifications for effective "implementation of CSR policy rules and to deal with certain matters not covered under the Act or rules but which facilitate smooth implementation of their CSR policies".