LEGISLATION seeking to encourage companies pursuing corporate social responsibility (CSR) initiatives made it out of the House committee on trade and industry on Tuesday.
House Bill 2699, or the proposed Act Encouraging Corporate Social Responsibility, Providing Incentives Therefor, allows companies with CSR initiatives to retain profits needed to fund these programs beyond the limit of 100% of paid-in capital.
The bill proposes to amend Section 42 of Republic Act 11232, or the Revised Corporation Code of the Philippines.
The amendment allows an exception for CSR in the rules governing profits to be retained. Section 42 sets out the rules for retaining capital, with board-approved expansion projects and reserves for probably contingencies currently the allowable uses of excess retained earnings. Section 42 also allows excess earnings to be retained when loan covenants prohibit the distribution of dividends.
The committee consolidated a number of CSR bills in arriving at House Bill 2699.
The consolidated bill recognizes the following activities as permissible for funding from excess earnings: charitable programs and projects; scientific research; youth and sports development; cultural or educational promotion; services to veterans and senior citizens; social welfare; environmental sustainability; health development; disaster relief and assistance; socialized and low-cost housing; and employee and worker welfare-related activities.
“The bill serves to motivate the private sector to voluntarily contribute to the improvements of economic situations, disaster preparations and response, societal welfare and the livelihoods of stakeholders without negatively impacting private businesses,” TINGOG Representatives Yedda Marie K. Romualdez and Jude A. Acidre, authors of one of the measures, said in the bill’s explanatory note.
The measure also tasks the Department of Trade and Industry (DTI) with organizing a program to recognize CSR efforts deemed worthy.
It also outlines a role for local government units, which are to assist companies in accomplishing their projects.
The bill creates a reporting requirement for CSR programs, with the Securities and Exchange Commission, the DTI or the Department of Finance designated as repositories of the reports. — Matthew Carl L. Montecillo