Liability of company under csr

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Querist : Anonymous (Querist)

24 December 2015 Dear Experts,
What the company has to do if it is covered under CSR...

Plz clarify....

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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24 December 2015 Corporate Social Responsibility Committee

As per Section 135 (1), Every Company which meets any of the following conditions in any financial year needs to constitute a Corporate Social Responsibility Committee of the board
• Net worth of INR 500 Crores or more
• Turnover of INR 1000 Crores or more
• Net profit of INR 5 Crores or more
It is clarified by Ministry of Corporate Affairs vide General Circular No. 21/2014 that, “Any financial year” referred to above implies ‘any of the three preceding financial years’.
Composition of CSR Committee

As per Section 135 (1), CSR Committee shall consist of three or more directors, out of which at least one director shall be an independent director.

Further it is clarified in the Companies (Corporate Social Responsibility Policy) Rules, 2014 that
• An unlisted Public Company or a Private Company which is not required to appoint an Independent Director under section 149, shall have its CSR Committee without such Director
• Private Company having only 2 Directors, shall constitute CSR Committee with 2 such Directors
• In case of a Foreign Company, CSR Committee shall comprise of at least 2 persons of which 1 person shall be as specified under Section 380(1)(d){residents who are authorized to receive any notice or documents on behalf of the Foreign Company} and another person shall be nominated by the Foreign Company
The Board shall disclose the Composition of the CSR Committee in its report under sub-section (3) of section 134 (Board Report) which shall be laid before the members in its general meeting.

Functions of CSR Committee

As per Section 135 (3), the responsibility of the CSR Committee shall be to:
• 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 [list of activities mentioned below]
• recommend the amount of expenditure to be incurred on the activities
• monitor the Corporate Social Responsibility Policy of the Company from time to time.
Further, as per the Companies (Corporate Social Responsibility Policy) Rules, 2014, CSR Committee shall institute a transparent monitoring mechanism for implementation of the CSR projects undertaken by the Company
Activities specified in Schedule VII (Indicative activities eligible to be included in CSR policy)

Activities relating to
• eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation (including contribution to Swach Bharat Kosh set up by CG for promotion of sanitation) and making available safe drinking water
• promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects;
• promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;
• ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water (including contribution to the Clean Ganga Fund set by the CG for rejuvenation of river Ganga);
• protection of national heritage, alt and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional handicrafts:
• measures for the benefit of armed forces veterans, war widows and their dependents;
• training to promote rural sports, nationally recognised sports, paralympic sports and Olympic sports;
• contribution to the Prime Minister's National Relief Fund or any other funds set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;
• contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government
• rural development projects
• slum area development
It is also clarified that the above entries in the said Schedule VII must be interpreted liberally so as to capture the essence of the subjects enumerated in the said Schedule.