Corporate Social Responsibility

1. Under Section 135 of Companies Act, 2013, every company has to constitute Corporate Social Responsibility committee whose :-

• Net worth is above Rs 500 Crores or,
• Turnover is above Rs 1000 Crores or,
• Net Profit before tax is Rs 5 Crores or more.

2. Composition of Corporate Social Responsibility Committee :-

• CSR committee shall have three or more directors our of which one should be independent director.
• However, as per section 149 of Companies Act, 2013, if there is no requirement to appoint independent director on Board than no need to appoint independent director in CSR committee also.
• In case of private companies having two directors, than appointment of two directors in CSR committee is suffice as per law.

3. Corporate Social Responsibility Policy :-

• CSR committee shall formulate CSR policy.
• This CSR policy shall indicate projects/programs as provided in schedule VII to the Companies Act, 2013 which company intends to take on.
• Amount of expenditure apportioned for each project/program.
• Board shall approve such policy and put it in Board's Report and on Company's website, if any.

4. As per section 135 of the Companies Act, 2013, it is mandatory for the companies coming under the stated benchmark to set aside 2% of Average Net Profit of last three years for CSR expenditure. This CSR expenditure has to be carried out as per CSR policy framed by CSR committee and approved by Board

4. If the company ceases to be a company under section 135 of the Companies Act, 2013 than after three financial years, company can dissolve its CSR committee.

4. Failing to comply the provisions of Section 135 of Companies Act, 2013, company has to specify reasons behind the same in there Board Report.

4. Foreign Companies can en route there CSR expenditure in India through Indian subsidiaries.

4. One off events are not qualified for CSR expenditure.

4. The company may decide to undertake its CSR activities approved by the CSR committee, through a registered trust or a registered society or a company established by the company or its holding or subsidiary or associate company under section 8 of the act or otherwise :-

Provided that -

1. if such trust, society or company is not established by the company or its holding or subsidiary or associate company, it shall have an established track record of three years in undertaking similar programs or projects ;
2. the company has specified the project or programs to be undertaken through theses entities, the modalities of utilization of fund on such projects or programs and the monitoring and reporting mechanisms. ( produced as it is from the rules )

10. Every Company shall include holding and subsidiary companies.

10. CSR expenditure shall include all expenditure including contribution to corpus for projects or programs relating to CSR activities approved by the board on the recommendation of the CSR committee, but does not include any expenditure on an item not in conformity or not in line with activities which fall within the purview of Schedule VII of the act. ( produced as it is from the rules )

Source :-

1. Section 135 of the Companies Act, 2013
2. Companies (Corporate Social Responsibility policy) Rules, 2014
3. Amended rules dated 12^th September, 2014
4. Amended Rules dated 19^th January, 2015
5. General Circular No. 21/2014
6. General Circular No. 36/2014