Government issues preliminary notices to 272 companies for CSR violations

The government has issued preliminary notices to 272 companies for not complying with corporate social responsibility (CSR) spending requirements under the companies law. Under the law, certain class of profitable entities is required to shell out at least 2 per cent of their average three-year annual net profit towards CSR activities in a financial year. 

In case of not spending the requisite amount, the firms concerned have to provide reasons for the same. In a written reply to Rajya Sabha, Corporate Affairs Minister Piyush Goyal said, Centralised Scrutiny and Prosecution Mechanism (CSPM) has been tasked to examine the records of top 1,000 companies



obliged to spend on CSR. 

He said, based on scrutiny, preliminary notices have been issued to 272 companies. The Minister said, this is a continuous process and the prosecution has been filed against companies that have not complied with CSR spend requirements and also not furnished any valid reasons for not spending or under spending.

The CSPM was set up by the Ministry of Corporate Affairs in April this year to keep a tab on entities' compliance with CSR obligations. The Registrar of Companies initiates action against non-compliant companies after due examination of records.