CSR Note
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With the notification of CSR provisions in Companies Act, 2013, it’s time for Indian Companies to imbibe the culture of giving back to the society. Essentially, it requires the prescribed companies ...

With the notification of CSR provisions in Companies Act, 2013, it’s time for Indian Companies to imbibe the culture of giving back to the society. Essentially, it requires the prescribed companies to spend at least 2% of the average net profits of 3 immediately preceding financial years and setting up a CSR Committee for formulation and monitoring of CSR Policy. However the Board is restricted to confine to CSR activities mentioned in Schedule VII.

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    CSR Note  CSR Note Document Transcript

    •           Corporate  Social   Responsibility  
    •                                               Note:   • A  company’s  holding  or  subsidiary,  which  satisfies  the  above  criteria,  will  also  have  to  constitute   CSR  Committee.   • Every  Foreign  company  having  its  branch  office  or  project  office  in  India,  satisfying  the  above   criteria  will  have  to  constitute  the  Comm.                                           Companies  falling  under  CSR  purview     Every  company  (including  foreign   company)  having     Net   Worth   of   INR   500   crores   or   more     Turnover   of   INR   1000   crores   or   more   Net   profit   of   INR   5   crores  or  more   or   or   during   any   financial   year   Needs   to   constitute   CSR   Committee   Composition  of  CSR  Committee     At  least  3  directors   Out  of  which  1  should  be   independent   Exceptions   Companies  not  required  to  appoint   independent  director  can  form   Committee  without  such  director   Private  Company  having  only  2   directors  can  form  Committee  with   only  2  directors  
    •                                                                       Note:       • Company   should   give   preference   to   local   area   and   areas   around   it   where   it   operates   for   Corporate  Social  Responsibility  activities   Neither  specified  in  Act  nor  Rules   Frequency  of  Board  Meeting     What  is  Corporate  Social  Responsibility     Defined  in  Companies  (CSR   Policy)  Rules  2014   It  means  and  includes,  but  is  not   restricted  to   Activities  as  per   Schedule  VII   Any  activity   undertaken  by  Board  as   per  CSR  Policy   Activities  covered  under  Schedule  VII     Eradication  of   hunger,  poverty,   malnutrition   Promoting   education   Promoting   gender   equality,   empowering   women   Environment   sustainability   Protection   of  national   heritage   Benefit  of   armed   forces   veterans   Promoting   sports   Contribution  to  PM   National  relief  fund  and   others   Contribution   to  technology   incubators   Rural   Development   Projects  
    •                                                                             What  is  CSR  Expenditure   Contribution  to  CSR   Corpus   Should  be  approved  by  Board  on  the   recommendation  of  CSR  Committee   At  least  2%  of  average  net  profits  of  3   immediately  preceding  financial  years  shall   be  spent  on  CSR       CSR  expenditure   done  only  in  India   will  be  considered   as  CSR   Programs  benefiting   only  employees  will   not  be  considered   CSR   Any  contribution  to   political  party  will   not  be  considered   CSR   How  to  structure  CSR  Activity   CSR  activity  may  be  carried  out  through   Registered   Trust   Registered   Society   Company   Holding,  subsidiary  or   associate  company   Collaborating  with   other  companies  
    •                                     Note:     • CSR  expenditure  shall  restrict  to  Schedule  VII  and  therefore  the  Board  has  to  limit  the  scope  of   CSR.                                                           Ingredients  of  CSR  Policy   Activities  should  relate  to  Schedule  VII   Shall  exclude  activities  undertaken  in  the   normal  course  of  business   Shall  clearly  specify  a  list  of  CSR  projects  along  with   implementation  schedule  and  monitoring  process       Shall  clearly  state  that  the  surplus  arising  from  the   CSR  Projects  shall  not  form  a  part  of  business  profit   of  Company   Role  of  CSR  Committee   Formulate  &  Recommend   to  Board,  a  CSR  Policy   Recommend  amount  of   CSR  expenditure   Monitoring  CSR  Policy   Committee  to  institute  a   transparent  monitoring   mechanism  
    •                                                   Role  of  Board   Approve  CSR  Policy  on   recommendation  of   Committee   Ensure  CSR  Policy  to   include  only  Schedule  VII   activities.   Ensure  that  activities  in   CSR  Policy  are   undertaken   Disclosure  of  CSR     If  Board  fails  to  spend   prescribed  CSR   expenditure   Annual  Disclosure   On  Website   Specify  reasons  for  not   spending  the  amount  in   Board  Report     In  Board  Report,  as  per   the  format  given  in  CSR   Rules   As  per  the  format  given   in  CSR  Rules