While responding to a query in Parliament, Nirmala Sitharaman, Union Minister of Finance and Corporate Affairs stated that there is no provision of Corporate Social Responsibility (CSR) consultant in Section 135 of the Companies (CSR Policy) Act, 2014.
As the statement unnerved companies, firms and practitioners, Noshir Dadrawala of the ‘Centre for Advancement of Philanthropy’ compiled a detailed response that explains and interprets the FM’s statement, pointing out that there is no real cause for concern.
- From the inception of the law, neither Section 135 of the Indian Companies Act nor the Rules had any specific provision for “CSR Consultants”
- “CSR consultants” cannot be considered as CSR “implementing agencies” nor can “CSR consultants” carry out CSR Activities as implementing agencies
- The FM has said that 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
- If a company decides to undertake CSR on its own, it may engage the professional services of an expert “CSR consultant” or “consulting agency” to help the company decide, execute and monitor the chosen CSR activities of the company based on the recommendation of its CSR Committee
- The expenses directly incurred by the company (including paying professional fees to an agency specializing in a certain discipline), for the designing, implementation, monitoring, and evaluation of a particular CSR project or programme would not fall under “administrative overheads” and neither would the cap of five per cent be applicable. The fees would be treated as professional fees for expert services rendered by the agency.
CSR Journal | No provision of CSR consultant in Companies Act, Nirmala Sitharaman confirms in Parliament