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Thursday, April 20, 2023

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ByDR. S.D. ISRANI, Advocate & Sr. Partner

SD Israni Law ChambersICAI Seminar at Kandivali, Mumbai

on Sunday, 27th April 2013


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Today’s business leader cannot justify his existence by profit statements alone. He must also render service to his local, national and world community.

DOROTHY SHAVER

THE COMPANIES ACT, 2013


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COPORATE SOCIAL

RESPONSIBILITY (CSR)



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CSR VOLUNTARY

GUIDELINES, 2009



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Core ElementsCare for all StakeholdersEthical functioningRespect for Workers' Rights and WelfareRespect for Human RightsRespect for EnvironmentActivities for Social and Inclusive Development



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COMPANIES ACT, 2013&

CSR



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S. 135Every company having net worth of Rs. 500 crores or more, orTurnover of Rs. 1000 crores or more or A net profit of Rs. 5 crores or moreDuring any financial year



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To constitute a Corporate Social Responsibility (CSR) Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.

Holding Co., Subsidiary Co., Foreign Co. having branch in India.



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The Board's report under sub-section (3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee.



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The CSR Committee shall,—(a) formulate and recommend to the Board, a CSR Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII;(b) recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and(c) monitor the CSR Policy of the company from time to time.



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The Board shall,—after taking into account the recommendations made by the CSR Committee, approve the CSR Policy for the company and disclose contents of such Policy in its report and also place it on the company's website, in such manner as may be prescribed;



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The Board shall ensure that,—the activities as are included in CSR Policy of the company are undertaken by the company.

company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its CSR Policy.



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Schedule VII

CSR Activities



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(i) eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and making available safe drinking water;

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



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(iii) 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 faced by socially and economically backward groups;



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(iv) ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintain quality of soil, air and water;



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(v) 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 arts and handicrafts;



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(vi) measures for the benefit of armed forces veterans, war widows and their dependents;

(vii) training to promote rural sports, nationally recognized sports, paralympic sports and Olympic sports;



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(viii) 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;



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(ix) contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government;

(x) rural development projects



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Preference to the local area and areas around it where it operates, for spending the amount earmarked for CSR activities.

If the company fails to spend such amount, the Board to mention the dame in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount.



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IMPLEMENTATION

OF

CSR ACTIVITIES



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TRANSPARENT MONITORING MECHANISM

CSR REPORTINGANNUAL REPORT

IN THE BOARD’S REPORT



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WHEN CAN A COMPANY BE EXEMPTED

FROM THE APPLICABILITY OF THE

PROVISIONS OF S.135



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The making of money, the accumulation of material power, is not all there is to living. Life is something more than these, and the man who misses this truth misses the greatest joy and satisfaction that can come into his life – service for others.

EDWARD W. BOK



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Offences And Penalties



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Many fold Increase in Fine

More sections have minimum Fine provision

Fines range from Rs. 5000

to Rs. 25 crore and more



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Cognisance of Offences



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Section 439

Section 621 (Old)


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Registrar

Shareholder

Person authorised by

the Central Government

SEBI



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Composition of offences



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Section 621A (Old)

Section 441 (New- NE)

Compounding of Offences



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Compoundable Offences


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Three kinds of offences are permitted to be compounded

under the Act



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Offences

which are punishable

with fine only



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Offences which are punishable

with imprisonment or fine.



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Offences

which are punishable with

imprisonment or

fine or

both



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Non – Compoundable

An offence punishable with imprisonment only or

with imprisonment and fine is not compoundable



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CLB to compound offences without any limit



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Fine Below Rs. 50000 may be compound by

Regional Director



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Similar offence committed within

a period of three years

not compoundable.



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Offences punishable with imprisonment or

fine or both

prosecution before the Magistrate



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Effect of compounding of an offence


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no prosecution can be launched

in relation to such an offence.


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prosecution is pending shall be discharged

by the court.


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Where the offences which can be compounded only with the permission of the court, the

composition thereof shall have the effect of acquittal of the

accused


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Period of Limitation


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S.468

Code of Criminal Procedure

Period of limitation


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Six months if the offence is punishable

with fine only



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One year if the offence is

punishable with imprisonment for a term

not exceeding one year


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Three years

if the offence is punishable with imprisonment

for a term exceeding one year

but not exceeding three years.



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S. 8

Fine not less than ten lakh rupees may extend to one crore rupees and

Directors and every officer of the company who is in default punishable with imprisonment for a term which may extend to three years or with fine not less than twenty-five thousand rupees which may extend to twenty-five lakh rupees, or with both:



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S.74 - Deposits

Fine not less than one crore rupees which may extend to ten crore rupees.

Every officer of the company who is in default punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both.



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S. 41 Private PlacementContravention of this section:

Company, its promoters and directors liable for a penalty which may extend to the amount involved in the offer or invitation or two crore rupees, whichever is higher, and the company shall also refund all monies to subscribers within a period of thirty days of the order imposing the penalty



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S. 46 Issue of Duplicate Shares

Intent to defraud:punishable with fine which shall not be less than five times the face value of the shares involved in the issue of the duplicate certificate, which may extend to ten times the face value of such shares or rupees ten crores whichever is higher



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S. 195 Insider Trading

Any contravention punishable with imprisonment for a term upto five years or with fine which shall not be less than five lakh rupees but which may extend to twenty-five crore rupees or three times the amount of profits made out of insider trading, whichever is higher, or with both.



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Presentation By:

S.D. ISRANI

Advocate & Senior Partner,

SD ISRANI LAW CHAMBERS,

911, Tulsiani Chambers,

Nariman Point,

Mumbai – 400021.

Ph: 22040117 /22810249

Email : [email protected] / [email protected]


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