Funding a community radio station as part of CSR activities

(Is it CSR compliant?)

Siddhartha S Bora, Date: 06-11-2014
In this write-up, we try to find out whether it is feasible for Centre for Rural
Development (CRD) to tie up with a corporate organization as a part of the latters corporate
social responsibility programme. We discuss the legal aspects, keeping in mind the recent
guidelines laid out in Section 135 of the Companies Act, 2013.
When the first rules came on Feb 28, 2014, there was a lot of confusion among the
stakeholders, As per the new CSR rules, the company has to draw a policy which should be
in line with the items mentioned in the Schedule VII of the Act. However, many people
wanted to take up activities that were not directly mentioned in Schedule VII. There were lots
of suggestions to expand the interpretations of the entries in Schedule VII so that more
activities can come under the ambit of CSR.
However, the general circular (No. 21/2014) issued by Ministry of Corporate Affairs
on June 18, 2014, sought to clarify the provisions of CSR under section 135 of the
Companies Act, 2013. It maintained that the entries in Schedule VII are not exhaustive and
they must be interpreted liberally so as to capture the essence of the subjects enumerated in
the schedule. It clarified that the items enlisted in the amended Schedule VII of the Act are
broad based and are intended to cover a wide range of activities. The CSR activities of a
company should be relatable to the entries in Schedule VII, they need not be explicitly
mentioned.
In the relaxed policy atmosphere, it becomes clear that a community radio project can
be directly related to entries in the schedule VII of Companies Act 2013. Depending upon the
programmes aired, it can be related to multiple entries in the schedule VII like promoting
education, rural development, empowering women, disaster management etc. Therefore, the
community radio project will qualify as a CSR project. Moreover, in its Recommendations
on Issues related to Community Radio Stations published on Aug 29, 2014, TRAI has
recommended channeling Corporate Social Responsibility funds of local companies as one of
the measures to ensure financial sustainability of the Community Radio station.
The rules provide that a company may decide to undertake its CSR activities
approved by the CSR committee, through a registered society with an established track record
of three years in undertaking similar programs or projects. CRD is registered as a society and
it has more than three year track record of undertaking development projects. Also, the
proposed project district Marigaon falls under the area of operation of several companies
which might be interested in contributing towards the project. Therefore, it is feasible to
approach these companies for support under CSR.