 bill no 270  of  2016 the companies (amendment) bill, 2016 byshri rabindra kumar jena, mp a billfurther to amend the companies act, 2013be  it enacted by parliament in the sixty-seventh year of the republic of india as follows:—1  (1) this act may be called the companies (amendment) act, 2016short title and18 of 20132 in section 135 of the companies act, 2013,—(i) in sub-section (5), the first proviso shall be omitted; and amendment of section 135(ii) after sub-section (5), the following sub-section shall be added at the end, namely:—5"(6) for the purpose of spending the amount earmarked for corporate social responsibility activities, the company shall not limit itself to local area or areas around it where it operates but shall select areas across the country" statement  of  objects  and  reasonsthe companies act, 2013, redefines corporate governance rules in india, emphasizing the creation and expansion of social programs india's development needs are colossal the country is host to some of the world's most arresting social problems, often at massive scalethe rules governing how companies are to contribute to corporate social responsibility (csr) are fairly basic leaving much of its implementation subject to interpretation the companies act, 2013, requires covered companies to give preference to areas in the vicinity of the company's operations for csr activities, whereas many of india's most serious social and health problems are located far away from key industrial centres it is reasonable to expect that indian states with the highest levels of economic activity will receive the largest share of this new csr spending this could ultimately augment regional development discrepancies already evident in indiathere is a mismatch between the regions with high levels of economic activity and those areas with the most critical social development needs a few of the critical social issues are prevalent in india's more developed regions however, the majority of people impacted by the social issues outlined in the companies act for csr spending is concentrated in india's less-developed states and therefore the csr mandate may ultimately deprive these states of an important new source of funds to combat their most pressing social problemsthe world is moving to a dematerialized form of commerce there is also a need to ensure that the rules accommodate existing and emerging business models that focus less on a physical presence some of the world's largest companies today and in the future will have an even smaller operational footprintthis bill is to bring more clarity that the csr mandate of the company and csr need of any particular area/region must be treated separately the bill seeks to amend the companies act, 2013 with a view to enable companies to spend the amount earmarked for corporate social responsibility (csr) activities in areas all across the country and not just in local area and areas around it where the company operateshence this billoctober 20, 2016 annexure extract from the companies act, 2013 (18 of 2013)135 (1)      corporate social responsibility     (5) the board of every company referred to in sub-section (1), shall ensure that the 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 corporate social responsibility policy:provided that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for corporate social responsibility activities:provided further that if the company fails to spend such amount, the board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount explanation—for the purposes of this section "average net profit" shall be calculated in accordance with the provisions of section 198             ———— a billfurther to amend the companies act, 2013————(shri rabindra kumar jena, mp)gmgipmrnd—2975ls(s3)—18-11-2016