CSR Act

SECTION 135
» Every company having a net worth of rupees five

hundred crore or more (100 million $ or more),or a
turnover of rupees one thousand crore or more (200
million $ or more) , or a net profit of rupees five crore
or more (1 million $ or more) during any financial year
shall constitute a Corporate Social Responsibility
Committee of the Board consisting of three or more
directors, out of which at least one director shall be an
independent director;
» The Board's report shall disclose the composition of
the Corporate Social Responsibility Committee.
1
3) The Corporate Social Responsibility Committee
shall,
a. formulate and recommend to the Board, a
Corporate Social Responsibility Policy which
shall indicate the activities to be undertaken by
the company as specified in Schedule VII;
b. recommend the amount of expenditure to be
incurred on the activities referred to in clause
(a); and
c. monitor the Corporate Social Responsibility
Policy of the company from time to time.
2
4) The Board of every company referred to in sub-section
(1) shall,
a) After taking into account the recommendations
made by the Corporate Social Responsibility
Committee, approve the Corporate Social
Responsibility Policy for the company and disclose
the contents of such Policy in its report and also
place it on the company's website, if any, in such
manner as may be prescribed; and
b) ensure that the activities as are included in
Corporate Social Responsibility Policy of the
company are undertaken by the company.
. 3
5) The Board of every company referred to in sub-
section (1), shall 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, in
pursuance of its Corporate Social Responsibility
Policy.
4
Provided that the company shall give preference to
the local area and areas around it where it operates,
for spending the amount earmarked for Corporate
Social Responsibility activities;
Provided that if the company fails to spend such

amount, 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.
5
SCHEDULE VII
7
SCHEDULE VII {CONTD.}
7
Under Clause (o) of Sub-
Section (3) of Section 134
 There shall be attached to statements laid before a

company in a general meeting, a report by its Board
of Directors, which shall include:
(o) The details about the policy developed and

implemented by the company on corporate social
responsibility initiatives taken during the year.
8
Sub Section (8) of Section 134
 If a company contravenes the provisions of this
section, the company shall be punishable with
fine which shall not be less than fifty thousand
rupees but which may 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.
9
Notified Rules on MCA Website
Guiding Principle
 CSR is the process by which an organization thinks
about and evolves its relationships with
stakeholders for the common good, and
demonstrates its commitment in this regard by
adoption of appropriate business processes and
strategies;
 CSR is not charity or mere donations;
10
Notified Rules on MCA Website..
{CONTD.}
Guiding Principle
 CSR is a way of conducting business, by which
corporate entities visibly contributing to the social
good;
 Socially responsible companies do not limit themselves

to using resources to engage in activities that increase
only their profits;
 They use CSR to integrate economic, environmental and

social objectives with the company’s operations and
growth. 11
Notified Rules on MCA Website.{CONTD.}
1. Companies activities may generally be conducted as

projects or programmes (either new or ongoing)
excluding activities undertaken in pursuance of the
normal course of business of a company. The CSR
Committee constituted under sec 135(1), shall
prepare the CSR Policy of the company which shall :
 Specify the sectors in which the projects and

programmes are to be undertaken;
12
Notified Rules on MCA Website..
{CONTD.}
 Prepare a list of CSR projects/programmes which a
company plans to undertake during the
implementation year, specifying modalities of
execution in the areas/sectors chosen and
implementation schedules for the same;
 Focus on integrating business models with social and

environmental priorities and processes in order to
create shared value;
 Provide that surpluses arising out of CSR activities

will not be part of the business profits of a company.
13
Notified Rules on MCA Website..{CONTD.}
2. The CSR Committee shall prepare a transparent

monitoring mechanism for ensuring
implementation of the projects / programmes /
activities proposed to be undertaken by the
company.
14
3. Where a company has set up an organization

which is registered as a Trust or Section 8
Company, or Society or any other form of entity
incorporated in India to facilitate
implementation of its CSR activities in
accordance with its stated CSR Policy,
a) The contributing company should specify the

activities to be undertaken by such an organization
utilizing funds provided by it;
b) The contributing company shall establish a
monitoring mechanism to ensure that the allocation
is spent for the intended purpose only. 15
Notified Rules on MCA Website...
{CONTD.}
4. A company may also conduct/implement its CSR
programmes through Trusts, Societies or Section 8
companies incorporated in India, which are not set
up by the company itself;
5. Such spends may be included as part of its

prescribed CSR spend only if such organizations
have an established track record of at least three
years in carrying on activities in related areas.
16
6. Companies may collaborate or pool resources with

other companies to undertake CSR activities and any
expenditure incurred on such collaborative efforts
would qualify for computing the CSR spending;
7. Only such CSR activities will be taken into

consideration as are undertaken within India.
17
8. Only activities which are not exclusively for the

benefit of employees of the company or their family
members shall be considered as CSR activity;
9. All companies falling under the provision of Section

135 (1) of the Act shall report the details of their CSR
initiatives as part of the Directors’ Report in the
Annual Report which should also be available on the
company’s website.
18
What is CSR and what is not?
What is CSR? What is not CSR?
Community benefits Employee benefits

Spend (Rupee value) No Rupee value
Project mode (Goals and Objectives) Core business
•Measurable
•Quantifiable Goals
•Timelines
•Execution plan
•Budget
•Monitoring & Evaluation
Social Business Projects Regulation/Compliance to a law
Shared Value Concept Pure Philanthropy
Foreign operations
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Reporting on CSR Initiatives
1. Provide a brief outline of the company’s CSR policy
including the statement of intent reflecting the ethos
of the company, broad areas of CSR interest and an
overview of activities proposed to be undertaken;
2. Indicate the web-link to the CSR Policy. The policy

should include the full list of
projects/activities/programmes proposed to be
undertaken by the company. must be provided.
20
Reporting on CSR Initiatives…
{CONTD.}
3. The composition of CSR Committee
4. Average Net Profit of the company for last 3

financial years
5. Threshold limit (2% of this amount as in 4 above)

21
{CONTD.}
6. Details of CSR activities/projects undertaken during the year in the following table :
 total amount to be spent for the year;
 amount carried forward from earlier years;
 Amount spent during the year as below;
 Amount carried forward for the year.
22
y
{CONTD.}
6. Details of CSR activities/projects undertaken during the
year in the following table : (cont’d)
1 2. 3. 4. 5. 6. 7. 8.
. CSR Sector in Projects/ Amount Amount Cumulative Amount
S project/activit which the Programmes outlay spent on spend upto spent
r y identified project is (budget) the the Direct
1.Local
N covered project/pro programm reporting through
areas/others
o gramme e/project period impleme
. 2.Specify the wise Subheads nting
state/district 1.Direct agency
expenditur
e on
projects
2.Over
heads
Total
23
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* Give details of Implementing Agency
{CONTD.}
7. In case the company has failed to spend the 2% of
Average Net Profit (INR) of last 3 financial years,
please provide the reasons for not spending the
amount;
8. A responsibility statement of the CSR Committee,

that the CSR Policy implementation and monitoring
thereof is, in letter and spirit, in compliance with
CSR Objectives.
24
{CONTD.}
 Signed
…………………………………………..
 (CEO/Managing Director/Director)
……………………………………
 (Chairman CSR Committee)
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SECTION 135

» Every company having a net worth of rupees five

Provided that if the company fails to spend such

 There shall be attached to statements laid before a

(o) The details about the policy developed and

 CSR is not charity or mere donations;

 Socially responsible companies do not limit themselves

 They use CSR to integrate economic, environmental and

1. Companies activities may generally be conducted as

 Specify the sectors in which the projects and

 Focus on integrating business models with social and

 Provide that surpluses arising out of CSR activities

2. The CSR Committee shall prepare a transparent

3. Where a company has set up an organization

a) The contributing company should specify the

5. Such spends may be included as part of its

6. Companies may collaborate or pool resources with

7. Only such CSR activities will be taken into

8. Only activities which are not exclusively for the

9. All companies falling under the provision of Section

Community benefits Employee benefits

2. Indicate the web-link to the CSR Policy. The policy

4. Average Net Profit of the company for last 3

5. Threshold limit (2% of this amount as in 4 above)

 total amount to be spent for the year;

 amount carried forward from earlier years;

 Amount spent during the year as below;

 Amount carried forward for the year.

8. A responsibility statement of the CSR Committee,

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