No provision of CSR consultant in Companies Act, Nirmala Sitharaman confirms in Parliament

New Delhi, 9 March 2021: There is no provision of Corporate Social Responsibility (CSR) consultant in existing Companies (CSR Policy) Rules, 2014 confirmed Nirmala Sitharaman, Minister of Finance and Corporate Affairs in Union Cabinet.

The minister was responding to a query asked by Sanjeev Kumar Singari, a parliamentarian representing Kurnool of Andhra Pradesh on March 8.

Coming from Yuvajana Sramika Rythu Congress Party (YSR Congress Party), Singari on Monday asked whether the Government is aware of the existence of the Corporate Social Responsibility (CSR) consultants, who most of the time dwindle away huge share of CSR fund as consultation fee. He also asked about the statuary actions taken against such consultants during each of the last two years.

Responding to his queries, the union minister said that there is no provision for CSR consultants in the legal framework.

In her words, "Section 135 read with Rule 4 of the Companies (CSR Policy) Rules, 2014 prescribes that the Board of the company is empowered to undertake its CSR activities either by itself or through implementing agencies as mentioned in the said rule. There is no provision for CSR consultants in the legal framework of CSR provided in Section 135 of the Act and rules made thereunder."

She went on explaining the existing rules saying the Government provides the broad framework for Corporate Social Responsibility (CSR) through Section 135 of the Companies Act, 2013 (‘Act’), Schedule VII of the Act and Companies (CSR Policy) Rules, 2014. CSR is a Board driven process and the Board of the company is empowered to plan, decide, execute and monitor the CSR activities of the company based on the recommendation of its CSR Committee. Section 135 read with Rule 4 of the Companies (CSR Policy) Rules, 2014 prescribes that the Board of the company is empowered to undertake its CSR activities either by itself or through implementing agencies as mentioned in the said rule.

About the action taken against any violation, she said, "Whenever any violation of CSR provisions is reported, action against such non-compliant companies are initiated as per provisions of the Companies Act, 2013 after due examination of records and following due process of law. Further, the recent amendments in the Companies (CSR Policy) Rules, 2014 notified on 22nd January 2021 have strengthened the CSR eco-system by bringing more objectivity, transparency, entrusting more responsibility on the Board and enlarging the disclosures by the companies."