Wednesday, 25 May 2016


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.

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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