CONSEQUENCES OF NON COMPLIANCE OF CSR
In case of any non compliance, the Companies Act, 2013 imposes an obligation on the board to the company at Annual General Meeting (AGM). Though there is no specific provision is provided for non compliance for spending on CSR under the Companies Act 2013 Section 450 is an overarching provision for punishing a company or its officers in case of where there is no specific punishment provided for an offence in the act. It says, “If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made there under, for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default shall be punishable with fine which may extend to ten thousand rupees, and where the contravention is continuing one with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.
” However one of the official from Corporate Ministry said, “The new law, which came into effect on April 1, 2014, says if a company isn’t able to give a satisfactory explanation about not spending on CSR activities, the corporate affairs ministry, at most, can question the roles and responsibility of its directors, but can’t act beyond that. “The quantum of penalty in case of non-compliance hasn’t been worked out,” According to the Economic Times survey, round 14,000 companies are expected to spend about Rs 15,000 crore on various social projects under the mandatory CSR spending