Section 135 of Companies Act (2013): Implementation challenges faced by Companies and NGOs

Abstract

The completion of the first year of implementation of the provisions of Section 135 of the Companies Act (2013) is perhaps an opportune moment to take stock of the potential implementation challenges faced by companies and non-governmental organizations (NGOs). The provisions of the section require companies to establish a CSR committee consisting of three members of the Board of Directors, develop a CSR policy, review the CSR activities and prepare periodic reports (the latter will be done by the CSR Committee). The above mentioned CSR infrastructure therefore necessitates significant capacity building within companies. With respect to implementation, companies may channel the resources through qualified NGOs engaged in social enterprise. Consequently NGOs will also require significant capacity building. In this paper we identify the implications of the new guidelines that are worthy of consideration; these implications are for companies that will invest the financial resources in CSR activities, the organizations that will implement the activities and other general implications. Furthermore the paper suggests mechanisms by which several of these challenges can be met and managed.