Corporate Social Responsibility (CSR)
Applicability- Applicable for companies:
1. having
net worth of Rs. 500 Cr. or more or
2. having
turnover of Rs. 1000 Cr. or more or
3. having
net profit of Rs. 5 Cr. or more during any financial year
Composition- CSR
committee shall consist of at least 3 directors, out of which at least 1
director shall be an independent director but an unlisted public company and a
private company is not required to have an independent director and shall
constitute the committee without having such director.
Functions-
1. To recommend the policy for CSR to
the Board indicating the activities to be undertaken by the company as
specified in Schedule VII.
2. To
recommend the amount of expenditure to be incurred on the Corporate Social
Activities.
3. To
monitor the CSR policy of the Company from time to time.
4. The company shall give preference to
local areas where it operates, for spending amount earmarked for CSR (CSR) activities.
The Board has to ensure that the company spends, in every
financial year, at least 2% of average net profits of the company made during 3
immediately preceding financial years, in pursuance of its Corporate Social
Responsibility policy and in case of failure to do so, necessary reason for not
spending the amount, shall be disclosed in the Director’s Report.
Where the company fails to spend such amount, the Board
shall in its report specify the reasons for not spending the amount. The approach
is to ‘comply or explain’.
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