................. is the first phase of strategic management process.
(A)Strategy Formulation
(B)Strategy Evaluation
(C)Strategy Implementation
(D)Environmental Scanning
Answer: (D) Environmental Scanning
Source: ICSI Guideline Answers (answer key), December 2024, Q. 67 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is the first phase of the strategic management process ?
(A)Strategy Formulation
(B)Strategy Evaluation
(C)Strategy Implementation
(D)Environmental Scanning
Answer: (D) Environmental Scanning
Source: ICSI Guideline Answers (answer key), June 2024, Q. 70 (Financial and Strategic Management paper, Syllabus 2017).
Which one of the followings is not a phase of strategic management process ?
(A)Environmental Scanning
(B)Strategy Forecasting
(C)Strategy Implementation
(D)Strategy Evaluation
Answer: (B) Strategy Forecasting
Source: ICSI Guideline Answers (answer key), June 2023, Q. 68 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is not a phase in strategic management process ?
(A)Strategy Scanning
(B)Strategy Formulation
(C)Strategy Implementation
(D)Strategy Evaluation
Answer: (A) Strategy Scanning
Source: ICSI Guideline Answers (answer key), December 2022, Q. 66 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is correct sequence of components/stages of Strategic Management Framework ?
(A)Business Assessment–Strategy Formulation–Translate Strategy to Action– Test, Learn Adapt
(B)Strategy Formulation–Translate Strategy to Action–Test, Learn, Adapt– Business Assessment
(C)Strategy Formulation–Translate Strategy to Action–Business Assessment– Test, Learn, Adapt
(D)Business Assessment–Test, Learn, Adapt–Strategy Formulation–Translate Strategy to Action
Answer: (A) Business Assessment–Strategy Formulation–Translate Strategy to Action– Test, Learn Adapt
Source: ICSI Guideline Answers (answer key), December 2022, Q. 72 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following statements is false ?
(A)Corporate Strategy is the essence of strategic planning process of an organization and it determines its growth objectives
(B)Business Level Strategy is applicable in those organizations which have different businesses and each business is treated as a Strategic Business Unit
(C)Though it deals with different subject matter, corporate strategy is sum total of business strategies of the organization
(D)All the above are true
ICSI did not treat any of the given options as correct.
Source: ICSI Guideline Answers (answer key), December 2022, Q. 78 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is not true regarding Business Strategy and Corporate Strategy ?
(A)Business Strategy is a strategy designed by business managers to improvise the overall performance of the organization, whereas Corporate Strategy is the strategy that describes the business type and ultimate goal of the organization
(B)Business Strategy is framed by middle level management, whereas Corporate Strategy is formulated by top level management
(C)The nature of business strategy is deterministic and legislative, whereas Corporate Strategy is executive and governing in nature
(D)All the above are true
Answer: (C) The nature of business strategy is deterministic and legislative, whereas Corporate Strategy is executive and governing in nature
Source: ICSI Guideline Answers (answer key), December 2022, Q. 80 (Financial and Strategic Management paper, Syllabus 2017).
Environment Scanning is one of the four phases of Strategic Management Process. Which of the following is not an essential feature of Environment Scanning ?
(A)It involves scanning the internal environment for strengths and weaknesses
(B)It involves scanning the external environment for opportunities and threats
(C)It involves deciding the best course of action for accomplishing the organizational objectives
(D)All of the above
Answer: (C) It involves deciding the best course of action for accomplishing the organizational objectives
Source: ICSI Guideline Answers (answer key), June 2022, Q. 66 (Financial and Strategic Management paper, Syllabus 2017).
Select the correct sequence of the four phases of strategic management process:
(A)Strategy Formulation — Strategy Implementation — Environmental scanning — Strategy evaluation
(B)Environmental scanning — Strategy evaluation — Strategy formulation — Strategy implementation
(C)Environmental scanning — Strategy formulation — Strategy Implementation — Strategy evaluation
(D)Strategy evaluation — Environmental scanning — Strategy formulation — Strategy implementation
Answer: (C) Environmental scanning — Strategy formulation — Strategy Implementation — Strategy evaluation
Source: ICSI Guideline Answers (answer key), December 2021, Q. 67 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is not considered as a major elements of the strategic management process?
(A)Environmental Scanning
(B)Implementing strategy
(C)Evaluating strategy
(D)Assigning administrative tasks
Answer: (D) Assigning administrative tasks
Source: ICSI Guideline Answers (answer key), June 2021, Q. 68 (Financial and Strategic Management paper, Syllabus 2017).
Select the incorrect statement regarding Business Strategy/Corporate Strategy:
(A)Business Strategy can be viewed as the strategy designed by the business managers to improvise the overall performance of the firm
(B)Corporate Strategy is the one expressed in the mission statement of the company, which describes the business type and ultimate goal of the organization
(C)The nature of business strategy is executive and governing, whereas the corporate strategy is deterministic and legislative
(D)Business strategy is a long term strategy; corporate strategy is a short term one
Answer: (D) Business strategy is a long term strategy; corporate strategy is a short term one
Source: ICSI Guideline Answers (answer key), June 2021, Q. 74 (Financial and Strategic Management paper, Syllabus 2017).
A corporate strategy can be defined as :
(A)A list of actions about operational planning and statement of organisation structure and control system
(B)A statement of how to compete, direction of growth and method of assessing environment
(C)Abatement of organisation’s activities and allocation of resources
(D)A course of action or choice of alternatives, specifying the resources required to achieve certain stated objectives
Answer: (D) A course of action or choice of alternatives, specifying the resources required to achieve certain stated objectives
Source: ICSI Guideline Answers (answer key), December 2019, Q. 61 (Financial and Strategic Management paper, Syllabus 2017).
How often should strategic management activities be performed ?
(A)Annually
(B)Quarterly
(C)Monthly
(D)Continuously
Answer: (D) Continuously
Source: ICSI Guideline Answers (answer key), December 2019, Q. 64 (Financial and Strategic Management paper, Syllabus 2017).
(b)‘A company secretary in today’s era while discharging his/her professional obligation has to perform several key roles which are also integral components of strategic management’. Discuss briefly about compliance and representation roles.
A company secretary in today’s era while discharging his or her professional obligations has to perform several key roles which are also integral components of strategic management. A brief on compliance and representation roles is as follows:
Compliances role : In current scenario a business has to adhere to various laws and regulations failing which may invite various legal hassles. A company secretary is required to ensure compliance with various laws and regulations and for doing so he / she should be conversant with the laws as well as the amendments that take place. For instance, in Indian context a company secretary has to ensure compliances of the following laws but not limited to- Companies Act; SEBI Act, Securities Contracts (Regulation) Act and rules and regulations made there under; Foreign Exchange Management Act; Consumer Protection Act; Depositories Act; Environment and Pollution Control Laws; Labour and Industrial Laws etc.
Representation role : A Company Secretary has to represent before various tribunals and courts in order to present the legal issue of the company. In India, a Company Secretary appears before the following legal bodies- National Company Law Tribunal (NCLT); National Company Law Appellate Tribunal (NCLAT); Competition Commission of India (CCI); Registrar of Companies; Tax Tribunals etc.
Source: ICSI Guideline Answers, June 2019, Q. 6(b) (Financial and Strategic Management paper, Syllabus 2017).
Comment on the following :
(iii)The nature of business strategy is executive and governing, whereas the corporate strategy is deterministic and legislative.
Business Strategy is the strategy framed by the business managers to strengthen the overall performance of the enterprise, whereas corporate Strategy is stated in the mission statement, which explains the business type and ultimate goal of the firm.
The fundamental difference between corporate and business strategy are explained below:
1.Business Strategy is framed by middle-level management which comprises of division, unit or departmental managers. Conversely, corporate strategy is formulated by top level managers, i.e. Board of Directors, CEO, and Managing Director.
2.The nature of business strategy is executive and governing, whereas the corporate strategy is deterministic and legislative.
3 The business strategy is a short term strategy, while the corporate strategy is a long term one.
4.The business strategies aim at selecting the business plan to fulfill the objectives of the organization. As against, the corporate strategy focuses on the business selection in which the company wants to compete in the marketplace.
5.Business strategy is concerned with a particular unit or division. Unlike corporate strategy which focuses on the entire organization, comprising of various business units or divisions.
6.The business strategy focuses on competing successfully in the market place with other firms. On the contrary, corporate strategy stresses on increasing profitability and business growth.
Business Strategy has an introverted approach, i.e. it is concerned with the internal working of the organization. In contrast, Corporate Strategy uses extrovert approach, that links the business with its external environment.
The business strategy is concerned with the growth in revenue, profitability and market share, hence it is more from the perspective of executive planning and governance. Corporate strategy takes into consideration the implementation of various processes required for the effective execution of the business strategy, hence it is more deterministic and legislative in nature.
Source: ICSI Guideline Answers, December 2018, Q. 6A(iii) (Financial and Strategic Management paper, Syllabus 2017).
(d)What is Strategic Leadership ? What are the benefits of Strategic Planning ?
Strategic leadership refers to a manager’s potential to articulate the strategic vision for the organization, and to motivate, guide and influence his subordinates to attain the objectives of that vision. Strategic leadership can also be defined as utilizing strategy in the management of employees. It is the ability to influence organizational members and to accomplish organizational change. Strategic leaders generate organizational structure, assign resources and communicate strategic vision. Strategic leaders have to work in an uncertain environment on various strategic issues.
The main purpose of strategic leadership is strategic productivity. Another aim of strategic leadership is to generate an environment in which employees match the organization’s needs in context of their individual job. Strategic leaders instill confidence to the employees in an organization to follow their own ideas, yet, moving in the direction of organisation’s overall goals. Strategic leaders make better use of reward and incentive system for encouraging productive and quality employees. Functional strategic leadership is about creativity, resourcefulness, and preparing to assist an individual in realizing his objectives and goals.
Benefits of Strategic Planning
Strategic planning can help your organization in a number of critical ways:
•Improved results and confidence: A proper plan may positively influence organizational performance and can contribute to a greater sense of purpose, progress and accountability among its team.
•Focus : Good strategic planning forces future thinking and can refocus and re-energies a disorientated organization.
•Problem solving: Strategic planning focuses on an organization’s most critical problems, choices and opportunities.
•Teamwork: Strategic planning provides an excellent opportunity to build a sense of teamwork, to promote learning, and to build commitment across the organization.
•Communication : All stakeholders have an interest in knowing the direction in which organisation is heading and also how their contribution will fit in overall plan.
•Greater control: Strategic planning can provide an organisation greater control the environment in which it operates.
Source: ICSI Guideline Answers, December 2025, Q. 2(d) (Syllabus 2022).
According to .............., Strategic Leadership is the ability to influence others to voluntarily make decisions that enhance the prospects for the organisation’s long-term success while maintaining long-term financial stability.
(A)Wilson
(B)Michael Porter
(C)May
(D)Gordon
Answer: (C) May
Source: ICSI Guideline Answers (answer key), December 2024, Q. 68 (Financial and Strategic Management paper, Syllabus 2017).
........... refers to key strategic leadership roles in which a leader quickly and clearly works through the complexity of key issues problem and opportunities to affect actions.
(A)Captivator
(B)Strategist
(C)Navigator
(D)Enterprise Guardian
Answer: (C) Navigator
Source: ICSI Guideline Answers (answer key), December 2024, Q. 70 (Financial and Strategic Management paper, Syllabus 2017).
A person who develops a long-range course of action or set of goals to align with the organization’s vision known as :
(A)Navigator
(B)Strategist
(C)Captivator
(D)Mobilizer
Answer: (B) Strategist
Source: ICSI Guideline Answers (answer key), June 2024, Q. 69 (Financial and Strategic Management paper, Syllabus 2017).
............... clearly and quickly works through the complexity of key issues, problems and opportunities to affect actions.
(A)Mobilizer
(B)Strategist
(C)Navigator
(D)Entrepreneur
Answer: (C) Navigator
Source: ICSI Guideline Answers (answer key), June 2024, Q. 74 (Financial and Strategic Management paper, Syllabus 2017).
(c)Aashna Kedia has been recently appointed as the head of a strategic business unit of a large multiproduct company. Advise Mrs. Kedia about the leadership role to be played by her in the execution of strategy.
Being appointed as the head of a strategic business unit of a large multiproduct company, Mrs. Aashna Kedia has been advised to perform the following key strategic leadership roles:
•Navigator – Clearly and quickly works through the complexity of key issues, problems and opportunities to affect actions (e.g., leverage opportunities and resolve issues).
•Strategist – Develops a long-range course of action or set of goals to align with the organization’s vision.
•Entrepreneur – Identifies and exploits opportunities for new products, services and markets.
•Mobilizer – Proactively builds and aligns stakeholders, capabilities, and resources for getting things done quickly and achieving complex objectives.
•Talent Advocate and Innvoator – Attracts, develops, and retains talent to ensure that people with the right skills and motivations to meet business needs are in the right place at the right time.
•Captivator – Builds passion and commitment toward a common goal.
•Global Thinker – Integrates information from all sources to develop a well-informed, diverse perspective that can be used to optimize organizational performance.
•Change Driver – Creates an environment that embraces change; makes change happen – even if the change is radical – and helps others to accept new ideas.
•Enterprise Guardian – Ensures shareholder value creation through courageous decisionmaking that supports enterprise – or unit-wide interests.
These nine roles are important at senior strategic levels because they help leaders understand what to do to be strategic. They address the broader challenges leaders face as they transition from managing more narrowly focused ‘silos’ to taking on the challenges of more enterprise-wide leadership.
Source: ICSI Guideline Answers, June 2024, Q. 2A(c) (Syllabus 2022).
attracts, develops and retains talent to ensure that people with the right skills and motivations to meet business needs are in the right place at the right time.
(A)Enterprise Guardian
(B)Captivator
(C)Talent Advocate
(D)Global Thinker
Answer: (C) Talent Advocate
Source: ICSI Guideline Answers (answer key), June 2023, Q. 69 (Financial and Strategic Management paper, Syllabus 2017).
‘‘Just as navigator continually takes reading to ensure whether he is relative to planned action, so should a business continually take reading to assure himself that his enterprise is on right course.’’ These words of Donnell are in respect of:
(A)Strategic Planning
(B)Controlling
(C)Directing
(D)Motivation
Answer: (B) Controlling
Source: ICSI Guideline Answers (answer key), December 2022, Q. 64 (Financial and Strategic Management paper, Syllabus 2017).
‘‘Building passion and commitment towards a common goal’’ is basic activity under which key strategic leadership roles ?
(A)Mobilizer
(B)Talent Advocate
(C)Captivator
(D)Change Driver
Answer: (C) Captivator
Source: ICSI Guideline Answers (answer key), December 2022, Q. 65 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is/are the function(s) of strategic leadership ?
(A)Articulating the strategic vision for the organization
(B)Influencing organizational members and organizational change
(C)Generating an environment in which employees match the organizational needs in the context of their individual jobs
(D)All of the above
Answer: (D) All of the above
Source: ICSI Guideline Answers (answer key), June 2022, Q. 69 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is not a key strategic leadership role of a strategist ?
(A)Navigator
(B)Global Thinker
(C)Change Driver
(D)None of the above
Answer: (D) None of the above
Source: ICSI Guideline Answers (answer key), June 2022, Q. 90 (Financial and Strategic Management paper, Syllabus 2017).
A company secretary in today’s era while discharging his or her professional obligations has to perform several roles; from the following list out the roles to be performed by a company secretary.
(1)Advisory
(2)Compliances
(3)Flawless disclosure and reporting
(4)Communication with stakeholders
(A)1, 2, 3, 4
(B)1, 2, 4
(C)1, 2, 3
(D)2, 3, 4
Answer: (A) 1, 2, 3, 4
Source: ICSI Guideline Answers (answer key), December 2021, Q. 68 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following statements is not true?
(A)Strategic leadership refers to a manager’s potential to articulate the strategic vision for the organization.
(B)Strategic leaders generate organizational structure, assign resources and communicate strategic vision.
(C)Strategic leader have to work in a certain environment on various strategic issues.
(D)The main purpose of strategic leadership is strategic productivity.
Answer: (C) Strategic leader have to work in a certain environment on various strategic issues.
Source: ICSI Guideline Answers (answer key), December 2021, Q. 70 (Financial and Strategic Management paper, Syllabus 2017).
Which is not a correct element of strategic leadership ?
(A)It deals with vision keeping the mission insight and with effectiveness and results
(B)It emphasises on transformational aspects which leads to emergence of leaders in the organization
(C)It inspires and motivates people to work together with a common vision and purpose
(D)Strategic leadership has internal focus rather than external focus which helps the organization to relate with environment
Answer: (D) Strategic leadership has internal focus rather than external focus which helps the organization to relate with environment
Source: ICSI Guideline Answers (answer key), June 2021, Q. 92 (Financial and Strategic Management paper, Syllabus 2017).
........................... refers to key strategic leadership roles in which a leader quickly and clearly works through the complexity of key issues problem and opportunities to affect actions.
(A)Navigator
(B)Strategist
(C)Captivator
(D)Enterprise Guardian
Answer: (A) Navigator
Source: ICSI Guideline Answers (answer key), December 2020, Q. 73 (Financial and Strategic Management paper, Syllabus 2017).
Case Study :
About the company
Black Diamond Ltd. (BDL) is a public limited company in Country-B engaged in mining and production of coal and coal products. The mission of the company is “to be a partner in the economy by producing and fulfilling the energy demand of the country by providing quality coal in economical and sustainable manner”. The company is listed on a stock exchange of the Country B. Shares of the company are held by the Govt. of Country-B, Mutual funds & FII and general public in proportion of 75%, 12% and 13% respectively. During the financial year 2018-19, the company has produced and dispatched 500 million tonnes of coal. Of this 76% to power plants, 2% to steel plant and rest to other sectors.
Coal is the prime source of energy and fulfills approx. 70% of energy demand of the country B. The thermal power plants, steel manufacturing plants, cement and fertilizer plants are the major consumers of coal.
The country-B has a large reserve of coal but the quality and cost are major concern. In the last few years there has been increase in import of coal by steel and power plants. The steel plants import coal due to quality and cost advantage over domestic coal. As per a study report conducted by the BDL, good quality of coal can be produced only through deep and underground mining. Underground mining requires highly automated technology.
Challenges before BDL
For adopting deep underground mining the BDL is required to acquire land for new mines and latest automated machines for mining. Land acquisition in country-B has been a hard task due to land acquisition related laws and protests by the local community and NGOs as BDL has acres of idle land in the form of used abandoned mines which cannot be used for agricultural activities or human rehabilitation due to the risk of landslides. BDL is a labour intensive company with low productivity. Employee cost is the major cost of BDL which accounts for 55% of total cost. BDL is second largest employer in country B.
Till recent past, the BDL was the only company which was allowed for mining and marketing of the coal in the country but with the changing economic scenario and to meet the growing energy demand the Govt. of Country-B is mulling to allot coal blocks to steel plant and thermal power plant for captive consumption.
The Govt. of the Country B is committed to boost manufacturing and industrial infrastructure of the country in next 10 years. Power and steel sector would be witnessing a multifold increase in demand not only from Govt. schemes but also from private and domestic consumers.
To meet the energy demand, the Govt. has reduced the duty on imported coal. The Govt. being a signatory of Paris agreement on climate change, is committed for sustainable development by reducing carbon emission caused by usage of fossil fuels. It has entered into various technological MoUs to install clean energy sources like nuclear, solar and wind in near future.
Required :
(ii)Identify the stakeholders in BDL. Discuss the strategy which BDL should adopt to prioritise the stakeholders.
Stakeholders in BDL are as under:
•Investors (Government, Mutual Funds and FII and General Public)
•Customers i.e thermal power plants, steel manufacturing plants, cement and fertilizer plants
•Suppliers
•Employees of BDL, Union and Associations
•Regulators as Administrative body (Ministry of Mines, Ministry of Environment, Forest and Climate Change, Ministry of Labour and Employment)
Priortising of Stakeholders
•BDL should give priority to Regulators who have financial, regulatory and positional powers to allot coal blocks to other companies and can influence the business of company.
•Being the labour intensive company, employees of BDL should be second priority and be satisfied as the functioning of the company is totally dependent on them.
•Customers should also be then priortised because in changing economic scenario and to meet the growing energy demand, the Government may allot coal blocks to others for captive consumption.
•Further, suppliers should also not be ignored as the functioning of company is dependent on them by providing the supplies. Last but not the least, the stakeholders who are neither having excessive interest nor power to influence should be monitored for their action and handles appropriately.
Source: ICSI Guideline Answers, June 2019, Q. 5(ii) (Financial and Strategic Management paper, Syllabus 2017).
( a )The concept of Strategic planning gained prominence in strategic management in corporate sector and it has maintained its importance in contemporary times too. It follows a cycle known as the strategic planning cycle.
Explain the steps followed in the strategic planning cycle and how strategic planning can help your organization ?
In 1960s, the concept of Strategic planning gained prominent in strategic management in corporate sector and it has maintained its importance in contemporary times too. It follows a cycle known as the strategic planning cycle.
Although, strategic planning process may be unique as per the specific requirements of any organisation, yet the Strategic Planning process contains the steps most commonly followed by most of the organisations:
•Deliberating mission of the organisation;
•Developing goals based on chosen mission;
•Examining internal environment (strengths and weaknesses);
•Examine external environment (opportunities and threats);
•Summarize findings of SWOT analysis;
•Formulate final strategy based on SWOT.
Strategic planning is an iterative process and it may begin with one mission and end with another, depending on the outcomes of the process.
Strategic planning can help your organization in a number of critical ways:
•Improved results and confidence: A proper plan may positively influence organizational performance and can contribute to a greater sense of purpose, progress and accountability among its team.
•Focus: Good strategic planning forces future thinking and can refocus and re-energise a disorientated organization.
•Problem solving: Strategic planning focuses on an organization’s most critical problems, choices and opportunities.
•Teamwork: Strategic planning provides an excellent opportunity to build a sense of teamwork, to promote learning, and to build commitment across the organization.
•Communication: All stakeholders have an interest in knowing the direction in which organisation is heading and also how their contribution will fit in overall plan.
•Greater control: Strategic planning can provide an organisation greater control the environment in which it operates.
Source: ICSI Guideline Answers, June 2025, Q. 2(a) (Syllabus 2022).
(b)How can the strategic planning process, though unique to each organization, be standardized with common steps ? What are the critical ways in which strategic planning can benefit your organization, and what are the potential limitations associated with it ?
Although, strategic planning process may be unique as per the specific requirements of any organization, it does contain the steps most commonly followed by most of the organizations:
•Deliberating and assessing the mission of the Organisation;
•Developing goals based on chosen mission;
•Examining internal environment (strengths and weaknesses);
•Examine external environment (opportunities and threats);
•Summarizing findings of SWOT analysis;
•Formulating final strategy based on SWOT.
Benefits of Strategic Planning for an Organisation
Strategic planning can help any organization in a number of critical ways:
•Improved results and confidence: A proper plan may positively influence organizational performance and can contribute to a greater sense of purpose, progress and accountability among its team.
•Focus : Good strategic planning forces future thinking and can refocus and re-energize a disorientated organization.
•Problem solving: Strategic planning focuses on an organization’s most critical problems, choices and opportunities.
•Teamwork: Strategic planning provides an excellent opportunity to build a sense of teamwork, to promote learning, and to build commitment across the organization.
•Communication: All stakeholders have an interest in knowing the direction in which organization is heading and also how their contribution will fit in overall plan.
•Greater control: Strategic planning can provide an organization greater control the environment in which it operates.
Limitations of Strategic Planning
•Costs can outweigh benefits: Strategic planning can consume a lot of time and money. This can be wasteful if the strategic planning is not successful, more so when some of these plans have long gestation periods.
•Development of Poor plans: Faulty assumptions about the future, poor assessment of an organization’s capabilities, poor group dynamics and information overload can lead to the development of poor plans.
•Implementation: If not implemented properly, whole planning exercise will go futile. Disillusionment, cynicism and feelings of powerlessness often result if people have contributed energy for development of a plan which is not implemented.
Source: ICSI Guideline Answers, December 2024, Q. 2(b) (Syllabus 2022).
As per Allison and Kaye, “............. is an organization’s process of defining its strategy, or direction and making decisions on allocating its resources to pursue this strategy. ’
(A)Strategic formulation
(B)Strategic planning
(C)Strategic forecasting
(D)Strategic follow-up
Answer: (B) Strategic planning
Source: ICSI Guideline Answers (answer key), June 2024, Q. 75 (Financial and Strategic Management paper, Syllabus 2017).
Strategic Planning process is modelled in cyclical framing of various steps. Which one of the following is not part of the cycle ?
(A)Deliberating mission of the Organisation
(B)Developing goals based on Vision statement
(C)Examining internal environment (strengths and weaknesses)
(D)Examine external environment (opportunities and threats)
Answer: (B) Developing goals based on Vision statement
Source: ICSI Guideline Answers (answer key), December 2023, Q. 68 (Financial and Strategic Management paper, Syllabus 2017).
...................... is the essence of strategic planning process, and occupies highest level of strategic decision-making.
(A)Corporate Level Strategy
(B)Business Level Strategy
(C)Functional Level Strategy
(D)Operational Level Strategy
Answer: (A) Corporate Level Strategy
Source: ICSI Guideline Answers (answer key), December 2023, Q. 72 (Financial and Strategic Management paper, Syllabus 2017).
Which of the following is/are limitation(s) of strategic planning ?
(A)It can consume lot of time and money. This can be wasteful if strategic planning turns out to be unsuccessful
(B)Faulty assumptions about the future, poor assessment of organizational capabilities, poor group dynamics and information overload can lead to the development of poor plans
(C)Both (A) and (B)
(D)None of the above
Answer: (C) Both (A) and (B)
Source: ICSI Guideline Answers (answer key), June 2022, Q. 71 (Financial and Strategic Management paper, Syllabus 2017).
(a)XYZ Ltd., a listed company, has the following net profits (as per Section 198) :
•FY 2021- 22 : ₹ 6 crore
•FY 2022- 23 : ₹ 9 crore
•FY 2023- 24 : ₹ 15 crore During FY 2024-25, the company undertook CSR activities as follows :
1.₹ 25 lakh spent on construction of a school building (owned and controlled by the company)
2.₹ 12 lakh spent on training employees’ children
3.₹ 18 lakh contributed to a registered NGO for rural healthcare
4.₹ 10 lakh spent on an ongoing project (sanitation project) not completed during the year
5.₹ 6 lakh transferred to PM CARES Fund
6.₹ 4 lakh administrative overheads
7.₹ 5 lakh surplus generated from CSR activities during the year
Additional Information :
•The ongoing project was approved by the Board.
•The company failed to transfer unspent amount (if any) within the prescribed time.
•Assume CSR rules are fully applicable.
Required :
(i)Compute minimum CSR obligation
(ii)Compute eligible CSR expenditure
(iii)Determine unspent CSR amount
(iv)State treatment of :
▪capital asset created
▪ongoing project
▪surplus arising
Explain penal consequences for non-compliance.
(i)Minimum CSR obligation
Average Net Profit
Average Profit = (₹ 6 crore + ₹ 9 crore + ₹ 15 crore)/3 = ₹ 10 crore
Minimum CSR Obligation (2%)
2% × ₹ 10 crore = ₹ 20 lakhs
(ii)Eligible CSR Expenditure
a)Analysis of CSR Expenditure & eligibility
| Particulars | Amount (₹ lakh) | Treatment |
| Not eligible (capital asset cannot be | ||
| Construction of a School | ||
| 25 | owned and controlled by the | |
| building | ||
| company) | ||
| Training Employee’s children | 12 | Not eligible (since exclusive for employee benefits) |
| Contribution to a registered NGO for rural health care | 18 | Eligible |
| Ongoing sanitation project | 10 | Eligible (subject to transfer rules) |
| PM CARES Fund | 6 | Eligible |
| Administrative overheads | 4 | Eligible (Permissible5% of total CSR expenditure) |
| Surplus from CSR activities | (5) | Deduct (not income, must be reinvested) |
b)Administrative Overhead Limit
Max. allowed = 5% of total CSR expenditure
Total CSR spend (before adjustment) = ₹ 18 + ₹ 10 + ₹ 6 + ₹ 4 = ₹ 38 lakh
| Overhead Limit = 5% of ₹ 38 lakh | = ₹ 1.9 lakh | |
| Allowed administrative overhead | = ₹ 1.9 lakh (excess i.e. ₹ 4 Lakh – |
₹ 1.9 Lakh = ₹ 2.1 Lakh disallowed)
c)Eligible CSR Expenditure
₹ 18+₹ 10+₹ 6+₹ 1.9=₹ 35.9 lakh
Considering that the Company would also be required to spend Surplus of ₹ 5 Lakh and accordingly, the CSR expenditure would be ₹ 35.9 Lakh + ₹ 5 Lakh = ₹ 40.9 Lakh.
(Alternatively, this ₹ 35.9 Lakh may include the Surplus amount of ₹ 5 Lakh. Therefore, in such a case, eligible CSR expenditure would be ₹ 35.9 Lakh)
(iii)Unspent CSR Amount
| Minimum CSR obligation for the year | = ₹ 20 Lakh |
| Add: Surplus (shall be utilized for CSR purposes only) | = ₹ 5 Lakh |
| Total CSR Obligation | = ₹ 25 Lakh |
| Amount Actual Spent | = ₹ 40.9 Lakh |
| Excess | = ₹ 15.9 Lakh |
(In case alternative answer is chosen above in Sl. No. ii, then Amount Actual Spent would be ₹ 35.9 Lakh and accordingly, excess amount spent would be ₹ 10.9 Lakh)
(iv)Special Treatments
(a)Capital Asset created (School Building)
•Not treated as CSR since owned by company.
•To qualify, it must be held by Section 8 Company / Registered Public Trust / Registered society/Beneficiaries.
(b)Ongoing Project
•₹ 10 lakh must be transferred to Unspent CSR Account within 30 days from the end of the financial year.
•Must be spent within 3 years .
(c)Surplus from CSR
•Cannot be treated as business profit. It shall be utilized for CSR purposes only.
•Must be reinvested in CSR, or transferred to Unspent CSR Account/specified fund.
(v)Penal Consequences for Non-Compliance
As per Companies (CSR Policy) Rules, 2014, if a company fails to spend the amount
or transfer unspent amount :
•Company penalty: Lesser of ₹ 1 crore, or twice of unspent amount
•Officer in default: Lesser of ₹ 2 lakh, or 1/10th of unspent amount
Source: ICSI Guideline Answers, June 2026, Q. 2(a) (Syllabus 2022).
( a )BPT Ltd. is a listed company liable for CSR (Corporate Social Responsibility Policy) under Section 135 of the Companies Act, 2013. The management has asked the Company Secretary about the certain activities which excludes from the ambit of statutory obligation of CSR.
As a Company Secretary, advise the management about such activities.
As per rule 2(d) of the Companies (Corporate Social Responsibility Policy) Rules, 2014, “Corporate Social Responsibility (CSR)” means the activities undertaken by a Company in pursuance of its statutory obligation laid down in section 135 of the Act in accordance with the provisions contained in these rules, but shall not include the following, namely: -
i.activities undertaken in pursuance of normal course of business of the company. However, any company engaged in research and development activity of new vaccine, drugs and medical devices in their normal course of business may undertake research and development activity of new vaccine, drugs and medical devices related to COVID-19 for financial years 2020-21, 2021-22, 2022-23 subject to the conditions that-
(a)such research and development activities shall be carried out in collaboration with any of the institutes or organisations mentioned in item (ix) of Schedule VII to the Act;
(b)details of such activity shall be disclosed separately in the Annual report on CSR included in the Board’s Report.
ii.any activity undertaken by the company outside India except for training of Indian sports personnel representing any State or Union territory at national level or India at international level;
iii.contribution of any amount directly or indirectly to any political party under section 182 of the Act;
iv.activities benefitting employees of the company as defined in clause (k) of section 2 of the Code on Wages, 2019;
v.activities supported by the companies on sponsorship basis for deriving marketing benefits for its products or services;
vi.activities carried out for fulfilment of any other statutory obligations under any law in force in India.
Source: ICSI Guideline Answers, December 2025, Q. 2(a) (Syllabus 2022).
1.Case Study :
(a)UKD Steel’s Vision strikes a balance between economic value as well as ecological and societal value by aspiring to be ‘‘A Global Benchmark in Value Creation and Corporate Citizenship”. Since its inception, UKD Steel’s CSR interventions have been more of a ‘provider’ to society, where the community was given support for its overall needs, both for sustenance and development. Gradually, the shift in approach led to UKD Steel being an ‘enabler’ focusing on building community capacity through training programs. The Company supports and propagates the principles of the United Nations Global Compact as a Founder Member. It acts as a signatory to the World Steel Sustainability Charter and supports the Affirmative Action program of the Confederation of Indian Industry. UKD Steel’s approach to business has evolved from the concept that the wealth created must be continuously returned to society. The responsibility of combining the three elements of society—social, environmental, and economic— is of utmost importance to the way of life at UKD Steel. Today UKD Steel’s CSR activities in India encompass the Company’s Steel Works, Iron ore mines, and collieries, reaching out to the cities of Jharkhand, Odisha, and West Bengal.
UKD Steel’s CSR Initiatives :
Community involvement is a characteristic of all UKD Group companies around the world. It can take the form of financial support, provision of materials, and the involvement of time, skills, and enthusiasm of employees. The Group contributes to a very wide range of social, cultural, educational, sporting, charitable, and emergency assistance programs. The Group works in partnership with the Government, national and international development organizations, local NGOs, and the community to ensure sustainable development. The Corporate Social Responsibility Division of UKD Steel delivers these responsibilities through several institutionalized bodies :
UKD Steel Rural Development Society (URDS)
UKD Steel Rural Cultural Society (URCS)
UKD Steel Family Welfare Foundation (UFWF)
UKD Steel Skill Enhancement Federation (USEF)
Recent Developments :
In its recently concluded Board meeting, the directors of UKD Steel have approved the appointment of Mr. Kumar as a Consultant to the Board. Mr. Kumar has a rich experience in the field of Corporate Governance and CSR. Further, Mr. Nimeet has been appointed by UKD Steel to act as the Company Secretary. His appointment comes against the backdrop of the recent concerns pointed out by the Independent Director Mr. Shobhit about the Corporate Governance practices within UKD Steel. The Board of UKD Steel wishes to seek professional guidance and leverage the expertise of Mr. Kumar in the areas of CSR and Corporate Governance.
A special board meeting was scheduled on 25th May 2025 where Mr. Kumar was invited to brief the board on certain matters. The agenda for the meeting was as under :
(A)To discuss about Mr. Kumar’s report to the Board on the factors influencing the CSR activities undertaken by UKD Steel.
(B)To receive a briefing from Mr. Kumar on the interface between CSR and Corporate Governance.
(C)To discuss the steps to be undertaken in the implementation of a robust corporate governance framework within UKD Steel.
Required :
(i)As a newly qualified company secretary, assist Mr. Kumar in compiling a report giving an account of the factors that shall influence the CSR activities undertaken by UKD Steel.
(ii)List out the important matters related to CSR where the Board of Directors of the Company takes decision.
(iii)Assuming yourself as Mr. Nimeet, kindly list down the points, which according to you, define the role of a Company Secretary in the implementation of a robust Corporate Governance framework.
(i)
Factors that shall influence the CSR activities undertaken by UKD Steel are as under:
1.Globalization coupled with a focus on cross-border trade, multinational enterprises, and global supply chains is increasingly raising CSR concerns related to human resource management practices environmental protection, and health and safety, among other things.
2.Governments and intergovernmental bodies such as the United Nations, the Organization for Economic Co-operation and Development (OECD), and the International Labour Organization (ILO) have developed compacts, declarations, guidelines, principles, and other instruments that outline social norms for acceptable conduct.
3.Advances in communications technology, such as the Internet, cellular phones and personal digital assistants, are making it easier to track corporate activities and disseminate information about them. Non-governmental organizations now regularly draw attention through their websites to business practices they view as problematic.
4.Consumers and investors are showing increasing interest in supporting responsible business practices and environmental issues.
5.Numerous serious and high-profile breaches of corporate ethics have contributed to elevated public mistrust of corporations and highlighted the need for improved corporate governance, transparency, accountability and ethical standards. However, being ethical and being socially responsible in making positive measurable contribution to society may not be same.
6.There is an increasing awareness of the limits of government legislative and regulatory initiatives to effectively capture all the issues that corporate social responsibility addresses.
7.Citizens in many countries are making it clear that corporations should meet standards of social and environmental care, no matter where they operate.
8.CSR has become a significant part in boosting the social image of a company, particularly a listed entity.
9.The legal mandate cast on directors under Section 166(2) of the Companies Act, 2013 is also taken care of in a way to an extent a company should take its CSR activities seriously.
10.Businesses are recognizing that adopting an effective approach to CSR can reduce risk of business disruptions, open up new opportunities, and enhance brand and company reputation.
11.Ethical persons shall be attracted to join the company.
12.Effective CSR will depend on the mindset of executives of the corporate who are taking up CSR initiatives.
13.CSR also depends on the implementing agencies with regard to their seriousness, integrity, honesty and attitude.
(ii)
The Board of Directors of the Company also takes decision on the following important matters related to CSR:
•Matters relating to monitoring for all projects – ongoing or otherwise
•Administrative Overheads
•Setting off excess amount
•Transfer of Capital Asset
•CSR Reporting
•Impact Assessment Report
•Disclosure on Website etc.
(iii)
Role of a Company Secretary (CS) in the implementation of a robust Corporate Governance framework are as under:
1.Company Secretary acts as the vital link between the company and its Board of Directors, shareholders and other stakeholders, and regulatory authorities.
2.The Company Secretary plays a key role in ensuring that the Board procedures are followed and regularly reviewed.
3.The Company Secretary provides the Board with guidance as to his duties, responsibilities, and powers under various laws, rules, and regulations.
4.The Company Secretary acts as a compliance officer as well as an in-house legal counsel to advise the Board and the functional departments of the Company on various corporate, business, economic, and tax laws.
5.The Company Secretary is an important member of the corporate management team and acts as the conscience keeper of the company.
6.CS has a legal mandate under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, to be a compliance Officer in which case the CS is responsible for governance requirements under the Regulations.
Source: ICSI Guideline Answers, June 2025, Q. 1(a) (Syllabus 2022).
(iii)( a ) A company proposed a list of activities to be carried out as part of its CSR policy :
(i)The CSR projects for the benefit of employees of the company and their families only.
(ii)A contribution of ₹ 50,000 to a political party under the provisions of section 182 of the Companies Act, 2013.
(iii)A contribution to the PM CARES Fund during covid pandemic.
(iv)Local activities like promotion of child and women education.
(v)The company plans to organize a Film Festival ceremony in Switzerland.
(vi)The company sponsors activities to gain marketing benefits for its products or services.
Whether activities proposed by company were in accordance with provisions of the Act and Companies (Corporate Social Responsibility Policy) Rules, 2014 ?
( b )Rivalry among existing competitors is one of Porter’s Five Forces. Under what specific
conditions does this rivalry become intense ?
(a)
| List of activities | Whether the activities are in accordance with the provisions of the Companies Act, 2013 and Companies (CSR Policy) Rules, 2014 | |
| i. | The CSR projects for the benefit of employees of the company and their families only. | No |
| ii. | A contribution of ₹ 50,000 to a political party under the provisions of section 182 of the Companies Act, 2013. | No |
| iii. | A contribution to PM CARES Fund during Covid Pandemic. | Yes |
| iv. | Local activities like promotion of child and women education. | Yes |
| v. | The company plans to organize a Film Festival ceremony in Switzerland. | No |
| vi. | The company sponsors activities to gain marketing benefits for its products or services. | No |
(b)
In competitive industry, firms have to compete aggressively for a market share, which results in low profits. Rivalry among competitors is intense when:
•There are several competitors;
•Exit barriers are high;
•Industry of growth is slow or negative;
•Products are not differentiated
•Products can be easily substituted;
•Low customer loyalty.
Source: ICSI Guideline Answers, December 2024, Q. 2A(iii) (Syllabus 2022).
Case Study :
Supreme Group of Industries (SGI) has invested in diverse projects which impact the lives of people in many ways and create value by helping in overall and holistic development of communities across multiple geographies. Through its various initiatives, the group endeavours to play a pivotal role in serving communities and projects which address the basic societal requirements. SGI has been involved in various Social Responsibility initiatives over last many years. These efforts have substantially improved the standard of living of the people through health care, education, livelihood and community development initiatives, making their living experience dramatically better. These activities impacting the lives of marginalized communities are spread across the globe reaching regions beyond SGI’s business locations. The key philosophy of all CSR initiatives of SGI is guided by three core commitments of Social Responsibility Initiatives :
(a)S – SCALE
(b)I – IMPACT
(c)S – SUSTAINABILITY
For the fiscal year 2025, SGI seeks to strategically consolidate the company’s CSR initiatives to focus on discrete social problems, all aimed at enabling lives, living and livelihoods of marginalized communities. SGI has identified the following focus areas :
•Community Infrastructure & Environment
•Community Health care
•Education and Skills enhancement
With the endeavour to restructure its CSR initiatives, the Board of SGI in its recent board meeting, approved the following proposals :
(1)Formation of Corporate Social Responsibility & Governance (CSRG) committee to finalise the CSR policy in light of the Group’s CSR plans for the fiscal year 2025.
(2)Appointment of a management consultant, to provide professional help to the CSRG committee on the factors influencing the proposed CSR initiatives of the group.
(3)Appointment of a practising company secretary, to advice on the role of board of directors with regards to the CSR related activities.
Mrs. Meena, an executive director, who was a qualified management graduate from a premier management institute, shared the emerging significance of corporate governance with the Board members during the board meeting. All the directors were eager to assess its applicability to the SGI group in light of the new CSR initiatives proposed by the Board. Mr. Pratyush, the company secretary who was present at the board meeting, also enlightened the board on the emerging concept of corporate governance. Board asked Mr. Pratyush to table in the next Board meeting the objectives of corporate governance and the role of company secretary in light of corporate governance framework.
Next day morning, Mr Pratyush came to his office and briefed his team on the expectations of the board from the corporate secretarial team and asked them to compile a note for the board on the objectives of corporate governance and the role of company secretary in the corporate governance. To aid them with the preparation of the note, he recapitulated his team on the recent developments of corporate governance framework.
Based on the facts mentioned in the above case study :
(a)Assume yourself as a Chairperson of the CSRG committee and prepare a report addressed to the Board explaining the Meaning and Benefits of Corporate Social Responsibility. The report should also include a section on the factors influencing Board’s CSR initiative based on the inputs received from the management consultant.
Report to the Board of Directors of Supreme Group of Industries (SGI)
Meaning of Corporate Social Responsibility: As per rule 2(d) of the Companies (Corporate Social Responsibility Policy) Rules, 2014, “Corporate Social Responsibility (CSR)” means the activities undertaken by a Company in pursuance of its statutory obligation laid down in section 135 of the Companies Act, 2013 in accordance with the provisions contained in these rules.
CSR is a concept whereby companies not only consider their profitability and growth, but also interests of society and the environment by taking responsibility for the impact of their activities on the society, environment and communities in which they operate. CSR aims to fulfil expectations that society has from business and it is viewed as a comprehensive set of social policies, practices and programs that are integrated throughout the business operations. The concept of CSR has evolved over the years and it is now used as a strategy and a business opportunity to earn stakeholders’ goodwill.
Benefits of Corporate Social Responsibility: Business cannot exist in isolation; business cannot be oblivious to societal development. This has also been highlighted in Section 166(2) of the Companies Act, 2013.The social responsibility of business can be integrated into the business purpose so as to build a positive synergy between the two. Some of the points highlighting the benefits of CSR are depicted below:
•CSR creates a favourable public image, which attracts customers. Reputation or brand equity of the products of a company which understands and demonstrates its social responsibilities is very high. Customers trust the products of such a company and are willing to pay a premium on its products. Organizations that perform well with regard to CSR can build reputation, while those that perform poorly can damage brand and company value when exposed. Brand equity, is founded on values such as trust, credibility, reliability, quality and consistency.
•CSR builds a positive image encouraging social involvement of employees-officially or even personally, which in turn develops a sense of loyalty towards the organization, helping in creating a dedicated workforce proud of its company.
•The company’s social involvement may assist in discouraging excessive regulation or intervention from the Government or statutory bodies, and hence gives greater freedom and flexibility in decision-making.
•The internal activities of the organisation have an impact on the external environment, since the society is an inter-dependent system.
•A business organisation has a great deal of power and money, entrusted upon it by society and should be accompanied by an equal amount of responsibility. In other words, there should be a balance between authority and responsibility.
•The atmosphere of social responsiveness encourages co-operative attitude between groups of companies. One company can advise or solve social problems that other organizations could not solve.
•Companies can better address the grievances of their employees and create employment opportunities for the unemployed.
•Financial institutions are increasingly incorporating social and environmental criteria into their assessment of projects. When making decisions about where to place their money, investors are looking for indicators of effective CSR management.
•In a number of jurisdictions, governments have expedited approval processes for firms that have undertaken social and environmental activities beyond those required by regulation.
Factors influencing Board’s CSR initiative
•Globalization – coupled with focus on cross-border trade, multinational enterprises and global supply chains – is increasingly raising CSR concerns related to human resource management practices, environmental protection, and health and safety, among other things.
•Governments and intergovernmental bodies, such as the United Nations, the Organisation for Economic Cooperation and Development (OECD) and the International Labour Organization (ILO) have developed compacts, declarations, guidelines, principles and other instruments that outline social norms for acceptable conduct.
•Advances in communications technology, such as the Internet, cellular phones and personal digital assistants, are making it easier to track corporate activities and disseminate information about them.
•Non-governmental organizations now regularly draw attention through their websites to business practices they view as problematic.
•Consumers and investors are showing increasing interest in supporting responsible business practices and environmental issues.
•Numerous serious and high-profile breaches of corporate ethics have contributed to elevated public mistrust of corporations and highlighted the need for improved corporate governance, transparency, accountability and ethical standards. However, being ethical and socially responsible by making a positive contribution to society may not be same.
•Citizens in many countries are increasingly demanding that corporations should meet standards of social and environmental care, no matter where they operate, including their supply chain.
•There is increasing awareness of the limits of government legislative and regulatory initiatives to effectively capture all the issues that corporate social responsibility addresses.
•Businesses are recognizing that adopting an effective approach to CSR can reduce risk of business disruptions, open up new opportunities, and enhance brand and company reputation.
•Effective CSR will depend on the mind set of executives of the corporate who are taking up CSR initiatives.
•CSR also depends on the implementing agencies with regard to their seriousness, integrity, honesty and attitude.
Source: ICSI Guideline Answers, June 2024, Q. 1(a) (Syllabus 2022).
Case Study :
Supreme Group of Industries (SGI) has invested in diverse projects which impact the lives of people in many ways and create value by helping in overall and holistic development of communities across multiple geographies. Through its various initiatives, the group endeavours to play a pivotal role in serving communities and projects which address the basic societal requirements. SGI has been involved in various Social Responsibility initiatives over last many years. These efforts have substantially improved the standard of living of the people through health care, education, livelihood and community development initiatives, making their living experience dramatically better. These activities impacting the lives of marginalized communities are spread across the globe reaching regions beyond SGI’s business locations. The key philosophy of all CSR initiatives of SGI is guided by three core commitments of Social Responsibility Initiatives :
(a)S – SCALE
(b)I – IMPACT
(c)S – SUSTAINABILITY
For the fiscal year 2025, SGI seeks to strategically consolidate the company’s CSR initiatives to focus on discrete social problems, all aimed at enabling lives, living and livelihoods of marginalized communities. SGI has identified the following focus areas :
•Community Infrastructure & Environment
•Community Health care
•Education and Skills enhancement
With the endeavour to restructure its CSR initiatives, the Board of SGI in its recent board meeting, approved the following proposals :
(1)Formation of Corporate Social Responsibility & Governance (CSRG) committee to finalise the CSR policy in light of the Group’s CSR plans for the fiscal year 2025.
(2)Appointment of a management consultant, to provide professional help to the CSRG committee on the factors influencing the proposed CSR initiatives of the group.
(3)Appointment of a practising company secretary, to advice on the role of board of directors with regards to the CSR related activities.
Mrs. Meena, an executive director, who was a qualified management graduate from a premier management institute, shared the emerging significance of corporate governance with the Board members during the board meeting. All the directors were eager to assess its applicability to the SGI group in light of the new CSR initiatives proposed by the Board. Mr. Pratyush, the company secretary who was present at the board meeting, also enlightened the board on the emerging concept of corporate governance. Board asked Mr. Pratyush to table in the next Board meeting the objectives of corporate governance and the role of company secretary in light of corporate governance framework.
Next day morning, Mr Pratyush came to his office and briefed his team on the expectations of the board from the corporate secretarial team and asked them to compile a note for the board on the objectives of corporate governance and the role of company secretary in the corporate governance. To aid them with the preparation of the note, he recapitulated his team on the recent developments of corporate governance framework.
Based on the facts mentioned in the above case study :
(b)Assume yourself as the Practising Company Secretary appointed by the Board and provide a write-up to the Board on their role in CSR related activities of the company, in light of the recent case law pertaining to Board’s compliance responsibility of implementing and reporting.
A brief write-up on the role of Board of Directors in CSR related activities of the company:
CSR is a Board-driven process. The responsibilities of the Board of a company which has a CSR mandate under the Companies Act, 2013, include the following:
•approve the CSR policy;
•disclose contents of such policy in its report and also place it on the company’s website, if any;
•ensure that the activities included in the CSR policy are undertaken by the company;
•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;
•satisfy itself regarding the utilisation of the disbursed CSR funds; and
•if the company fails to spend at least two per cent of the average net profits of the company, 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 and transfer the unspent CSR amount as per provisions of sections 135(5) and 135(6) of the Companies Act, 2013.
•alter such annual action plan based on reasonable justification as per recommendation of CSR committee.
Apart from the above, the Board of Directors of the Company also has to take decisions on the following important matters related to CSR:
•Matters relating to monitoring of CSR projects – ongoing or otherwise
•Administrative Overheads
•Setting off excess amount
•Transfer of Capital Asset
•CSR Reporting
•Impact Assessment Report
•Disclosure on Website etc.
Corporate Social Responsibility – Board’s Compliance Responsibility of Implementing and Reporting- Case Law:
In the matter of Chettinad Earth Movers (P.) Ltd. CA NO. 1096/CB/2018 NCLT Chennai, the Hon’ble
court held that the Company and its Officers are in default have violated the provisions of Section 134(3)(o) read with Section 135 of the Companies Act, 2013, which is punishable under Section 134(8) of the Companies Act, 2013. The said offence is not intentional and it is not prejudicial to the interest of the shareholders or the creditors.
The provisions of Section 134(8) of the Companies Act, 2013, provide that the Company shall be punishable with fine which shall not be less than fifty thousand rupees but which extend to twenty-five lakh rupees, and every officer of the Company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees or with both. [This provision was amended vide Notification dated 28th September, 2020 by the Companies (Amendment) Act, 2020.]
The applicant pleaded for taking a lenient view on the ground that it was the first offence, which has been confirmed by the concerned RoC. Therefore, the Application of the Company and its Officers in default is to be allowed and the offence is to be compounded in exercise of the powers conferred under section 441, by imposing a fine under section 134(8), to the tune of ₹ 1,50,000 i.e. ₹ 50,000 on each the Company, and its two Officers.
Source: ICSI Guideline Answers, June 2024, Q. 1(b) (Syllabus 2022).
Case Study :
Supreme Group of Industries (SGI) has invested in diverse projects which impact the lives of people in many ways and create value by helping in overall and holistic development of communities across multiple geographies. Through its various initiatives, the group endeavours to play a pivotal role in serving communities and projects which address the basic societal requirements. SGI has been involved in various Social Responsibility initiatives over last many years. These efforts have substantially improved the standard of living of the people through health care, education, livelihood and community development initiatives, making their living experience dramatically better. These activities impacting the lives of marginalized communities are spread across the globe reaching regions beyond SGI’s business locations. The key philosophy of all CSR initiatives of SGI is guided by three core commitments of Social Responsibility Initiatives :
(a)S – SCALE
(b)I – IMPACT
(c)S – SUSTAINABILITY
For the fiscal year 2025, SGI seeks to strategically consolidate the company’s CSR initiatives to focus on discrete social problems, all aimed at enabling lives, living and livelihoods of marginalized communities. SGI has identified the following focus areas :
•Community Infrastructure & Environment
•Community Health care
•Education and Skills enhancement
With the endeavour to restructure its CSR initiatives, the Board of SGI in its recent board meeting, approved the following proposals :
(1)Formation of Corporate Social Responsibility & Governance (CSRG) committee to finalise the CSR policy in light of the Group’s CSR plans for the fiscal year 2025.
(2)Appointment of a management consultant, to provide professional help to the CSRG committee on the factors influencing the proposed CSR initiatives of the group.
(3)Appointment of a practising company secretary, to advice on the role of board of directors with regards to the CSR related activities.
Mrs. Meena, an executive director, who was a qualified management graduate from a premier management institute, shared the emerging significance of corporate governance with the Board members during the board meeting. All the directors were eager to assess its applicability to the SGI group in light of the new CSR initiatives proposed by the Board. Mr. Pratyush, the company secretary who was present at the board meeting, also enlightened the board on the emerging concept of corporate governance. Board asked Mr. Pratyush to table in the next Board meeting the objectives of corporate governance and the role of company secretary in light of corporate governance framework.
Next day morning, Mr Pratyush came to his office and briefed his team on the expectations of the board from the corporate secretarial team and asked them to compile a note for the board on the objectives of corporate governance and the role of company secretary in the corporate governance. To aid them with the preparation of the note, he recapitulated his team on the recent developments of corporate governance framework.
Based on the facts mentioned in the above case study :
(c)Assume yourself as a young qualified Company Secretary in the corporate secretarial team led by Mr. Pratyush and compile a note to the Board based on Mr. Pratyush’s briefing on :
(i)Objectives of corporate governance.
(ii)Role of Company Secretary in the implementation of corporate governance framework in SGI group.
A brief note to the Board by CS Pratyush
(i)Objectives of corporate governance:
Corporate Governance is aimed at creating an organization which is transparent in its operations vis-à-vis its stakeholders. It envisages an organization in which emphasis is laid on fulfilling the social responsibilities towards the stakeholders in addition to the earning of profits. The objectives of Corporate Governance are to ensure the following:
a)Properly constituted Board capable of taking independent and objective decisions.
b)Board is independent in terms of Non-Executive and Independent Directors.
c)Board adopts transparent procedures and practices.
d)Board has an effective machinery to serve the concerns of the Stakeholders.
e)Board to monitor the functioning of the Management Team.
f)Board remains in effective control of the affairs of the Company.
(ii)Role of Company Secretary in the implementation of corporate governance framework in SGI group
Company Secretary provides the impetus, direction and guidance for achieving world class corporate governance. They are primary source of advice on the conduct of business. A Company Secretary-
•acts as a vital link between the company and its Board of Directors, shareholders and other stakeholders and regulatory authorities;
•plays a key role in ensuring that the Board procedures are followed and regularly reviewed;
•provides the Board with guidance as to its duties, responsibilities and powers under various laws, rules and regulations;
•acts as a compliance officer as well as an in-house legal counsel to advise the Board and the functional departments of the company on various corporate, business, economic and tax laws;
•is an important member of the corporate management team and acts as conscience keeper of the company. The company secretary being an important human capital of the management of the business organization should put all the efforts to ensure that through his/her roles corporate governance prevails.
Source: ICSI Guideline Answers, June 2024, Q. 1(c) (Syllabus 2022).
Which of the following is not a functional role of Company Secretary in Strategic Management ?
(A)Advisory Role
(B)Communication with Stakeholders
(C)Compiling and Certifying Financial Statements
(D)Management of meetings of board and committees
Answer: (C) Compiling and Certifying Financial Statements
Source: ICSI Guideline Answers (answer key), June 2022, Q. 70 (Financial and Strategic Management paper, Syllabus 2017).
Comment on the following :
(b)Strategic Management is of paramount significance for a company secretary.
A Company Secretary is a Key Managerial Personnel and plays a pivotal role in ensuring best governance practices of the corporate world. In order to ensure that every activity of the business organization are conducted in a manner not harmful to the interests of the stakeholders, i.e. shareholders, employees, suppliers, government agencies etc. it is essential that a Company Secretary work as a strategist and not only, as a professional representing the company in compliance and legal matters. .
He is required to contemplate the future changes in the political, economic, social, technological and legal environment and its impact on the industry as well as the company per se. Further, the job of a company secretary is a balancing act, meaning that on the one hand he needs to take care of almost all the aspects of corporate affairs, i.e. acting as a mediator between the board and the shareholders, communicating with the outside world on various corporate issues, conducting of meetings and proper maintenance of its records etc. and on the other hand he is required to play a significant role of a governance professional thereby ensuring best governance practices in the company.
A Company Secretary has to take care of the following critical facets of the business, i.e. Risk management; Assessing the Sustainability of an organisation; Contribution towards corporate vision and mission; Assessment of the magnitude of business competition; Guiding the company on the path of corporate social responsibility etc.
Thus, it is clear that the role of company secretary encompasses almost all the functions which a top management official need to perform and in view of this, strategic management is of paramount significance for a company secretary.
Source: ICSI Guideline Answers, December 2018, Q. 6(b) (Financial and Strategic Management paper, Syllabus 2017).