The government has framed a draft corporate social responsibility (CSR) guideline keeping a provision for companies that are to be involved in CSR activity compulsorily at a tolerable level.
As per the draft policy, eligible companies have to allocate a separate fund equivalent to at least 2.0 per cent on an average of its last three financial years' net profit for CSR expenditure on mandatory basis.
In case of any unspent fund, the allocated amount will be added with the next year's CSR fund.
The Finance Division under the Ministry of Finance (MoF) recently framed the draft CSR guideline with the provisions.
Companies will have to follow the guideline after finalisation of the draft at the time of formulation of a CSR policy of their respective organisations.
Finance minister Abul Maal Abdul Muhith sent the draft policy with a demy official letter, dated January 04, 2017, to different relevant ministries and departments seeking their opinion within a month.
Currently, the government does not have any specific CSR policy or guideline for companies although the central bank has framed one as regulator of commercial banks' CSR activities.
Sources said the draft guideline will be finalised soon after getting opinions and recommendations of all relevant ministries and departments.
The draft CSR guideline said eligibility of companies will be determined for CSR activities on the basis of its net asset or net profit or business turnover in a financial year.
Foreign companies operating in Bangladesh will come under CSR in this process, the guideline said.
For expenditure of CSR fund, companies will have to form a CSR committee on mandatory basis comprising three directors of the company's board.
There will be an independent director in the committee. The committee will recommend the CSR activity and allocation of fund on it.
The committee will also scrutinise the companies' CSR policy and amend it.
The board of the company will approve CSR projects with the recommendations of the committee on formation of registered trust, registered society or registered company under company law (not for profit).
The company board can spend the money in CSR activities with or through partnership of other registered trust, society or company.
The draft policy specifies some 11 sectors where CSR expenditure can be made by companies.
The sectors include hunger and poverty alleviation, education expansion, health, nutrition, sanitation and safe drinking water, supply of mid-day meal and fortified biscuits, skill improvement, employment- generating technical education, women empowerment, gender equality, protection to orphans, persons with disability and elderly people, sustainable environment, preservation of places related to national heritage, culture and history, expansion of sports in local, national and international level, establishment of libraries in rural and urban areas and its management, and development activities in Chittagong hill tracts, coastal and river erosion-prone areas.
There is a provision of inspection of CSR activities, annual reporting, income tax rebate and formation of a national council comprising ministries, business organisations, civil societies and professionals to examine CSR issues and to give recommendations. Two meetings of the council will be held annually.
There are seven principles on expenditure of CSR fund in the draft policy.
As per the draft policy, CSR expenditure should be made for welfare of mass people of the society.
Employees of a company should remain out of CSR programme.
"The company gets direct benefit from spending for ensuring work place safety, health facility for employees which should be out of purview of CSR," the draft policy said.
Compliance issues including setting up of effluent treatment plants for environmental protection, improvement of working conditions, maintaining quality of products and paying wages and taxes on time as per existing law will also not be considered as CSR.
There must be continuity of CSR activities. Any kind of occasional donation to government fund, educational institution or orphanage will not be considered as CSR as it benefits a company like an advertisement, the draft policy said.
For macroeconomic and environmental protection, CSR expenditure will be non-refundable. Companies will not be allowed to collect expenditure from beneficiaries, the draft said.
CSR expenditure should not create any profit for the company. The fund of CSR must spend on projects inside the country.
Companies will have to include a separate report on CSR activities in its annual report. A copy of the report will have to be sent to the relevant ministry.
The draft policy kept the provision of income tax rebate for companies for CSR expenditures.
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