The document discusses Corporate Social Responsibility (CSR) requirements for companies in India according to the Companies Act of 2013. It defines CSR as activities for social good that companies are required to undertake. The key requirements are that companies meeting certain profit thresholds must spend 2% of their net profits on CSR activities related to issues like poverty, healthcare, education, and environment sustainability. The document provides guidance on forming a CSR committee and policy, eligible CSR activities, and how higher education institutions can utilize CSR funds.

1. Understanding CSR
COMPANIES’ ACT 2013 | SECTION 135

2. Contents
 What is CSR?
 What is the mandate?
 What will the companies need to do?
 What’s the role of the CSR committee?
 What’s the role of the Board?
 How can companies undertake their CSR activities?
 Which activities could be undertaken as part of CSR?
 Which activities are not eligible as CSR activities?
 What can Higher Educational Institutions do?
 How will this process be facilitated?
 What are the other options?
 Conclusion
 Appendix

3. What is CSR?
 CSR is an abbreviation for Corporate Social Responsibility
 It is part of the section 135 and schedule VII under companies’ act 2013,
which came into effect from April 1, 2014

4. What is the mandate?
 With effect from April 1, 2014, every company, private limited or public
limited, which either has a net worth of 500 crore or more, or turnover of
1000 crore or more, or a net profit of 5 crore or more needs to spend at
least 2% of its net profit on Corporate Social Responsibility activities
 The net profit considered should be the average net profit of immediate
preceding three financial years

5. What will companies need to do?
 Company shall constitute a CSR 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 under sub-section (3) of section 134 shall disclose the
composition of CSR committee

6. What’s the role of the CSR
Committee?
 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
 Recommend the amount of expenditure to be incurred on the activities
referred to in point above; and
 Monitor the Corporate Social Responsibility Policy of the company from
time to time

7. What’s the role of the Board?
 After taking into account the recommendations made by the Corporate
Social Responsibility Committee, approve the Corporate Social
Responsibility Policy for the company and disclose 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
 Ensure that the activities as are included in Corporate Social
Responsibility Policy of the company are undertaken by the company
contd…

8. Contd…
 The Board of every company, shall ensure that the company spends, in
every financial year, at least 2% of the average net profits of the company
made during the three immediately preceding financial years, in pursuance
of its Corporate Social Responsibility Policy:
 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 further 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

9. How can companies undertake their
CSR activities?
 through a registered trust or society
 through a company established by its holding
 Through a subsidiary or an associate company or otherwise

10. Which activities could be undertaken
as part of CSR?
 Eradicating hunger, poverty and malnutrition
 Promoting preventive healthcare, education and gender equality
 Setting up homes for women, orphans and senior citizens
 Reducing inequality faced by socially and economically disadvantaged
groups
contd…

11. Contd…
 Ensuring environmental sustainability and ecological balance
 Animal welfare
 Protection of national heritage, arts and culture
 Measures for benefit of armed forces veterans, war widows and their
dependants
contd…

12. Contd…
 Rural development initiatives
 Contribution to Prime Minister’s National relief fund
 Socio economic development of SC, ST, OBCs, minorities and women
 Contributions or funds provided to technology incubators of academic
institutions

13. Which activities are not eligible as
CSR activities?
 Projects or programs or activities that benefit only the employees of the
company and their families
 One off events such as marathons/awards/charitable
contribution/advertisement/sponsorships of TV programmes etc.
 Expenses incurred by companies for the fulfilment of any other Act/Statute
of regulations (such as labour laws, land acquisition act 2013, apprentice
act 1961 etc.)
contd…

14. Contd…
 Contribution of any amount directly or indirectly to any political party
 Activities undertaken by the company in pursuance of its normal course of
business
 Projects or programmes or activities undertaken outside India

15. Issues with CSR funding for Higher
Education
 Limited to no CSR funds in Higher Education because of focus on primary
and secondary education
 Legalities involved with mobilizing CSR funds
 Lack of awareness about CSR
 Limited to no interaction with the industries
 Universities don’t approach companies with a value proposition
 Universities currently lack resources to attract CSR funds

16. What can Higher Educational
Institutions do?
 Set up a dedicated CSR desk. Register a trust or a society or a company
under section 8 under section11/12A of the Income Tax Act and open bank
account for the same
 Maintain an alumni database, which would be extremely helpful when
reaching out to companies
 Create a database of companies and categorize companies according to
the departments in the university
contd…

17. Contd…
 Identify the projects in each department which could get CSR funds, or a
collaboration in which the partner company could utilize its CSR funds
 List projects on the university website, prepare proposals/DPRs (Detailed
Project Reports) for such projects and also upload them to the project links
listed on the website
 Prepare a communication and outreach strategy to reach out to companies.
Having a value proposition for companies is important
 Leverage the opportunities presented by Government schemes such as
Swachh Bharat Abhiyaan, Skill India, Make in India etc.

18. How will this process be facilitated?
 If the company contributes through its own registered trust/society/sec 8
company, it can contribute regulated CSR funds directly to Universities
 If the company does not have its own registered trust/society/sec 8
company, but the university (one that is established by a central or state
act) has such trust/society/sec 8 company, then the company can
contribute the regulated CSR funds directly to the trust/society/sec 8
company established by university
 In all other cases, company can route its regulated CSR funds through a
trust/society/sec 8 company that has at least 3 years established track
record

19. What are the other options?
 SAMMAAN – www.bsesammaan.com – an initiative by BSE and CII
 Universities can look at strategic partnerships with either NGOs or
foundations or trusts through which the funds could be mobilized
 Universities can take professional help by getting CSR consulting
companies on board and setting systems in place
 NGOBOX – www.ngobox.com – a non-profit CSR market place

20. Conclusion
 The need of the hour is to go beyond traditional philanthropic activities and
look for synergies in partnerships and funding
 Companies have already started employing dedicated CSR experts to
chalk out and implement CSR strategies that align with their long term
goals
 It’s high time higher educational institutions start having strategies to
attract CSR funds and make optimal use of those funds for better
educational outcomes, research output and employability

21. Appendix

22. Recent changes to section 135
 Recently, the Ministry of Corporate Affairs made a change to the section
135 related to the eligibility of registered trust or society
 Following is the link to the official notification:
http://gcsra.org/writereaddata/images/pdf/Gazette-Notification.pdf

23. FAQs
 The Ministry of Corporate Affairs has released FAQs pertaining to CSR.
The link for the same is follows:
http://www.mca.gov.in/Ministry/pdf/FAQ_CSR.pdf

24. Additional resources
 The following is the link of a discussion on Google+ Hangout facilitated by
Shereen Bhan from CNBC TV18, and attended by then Minister of
Corporate Affairs, Sachin Pilot, and other experts. This may be viewed to
gain more clarity:
https://www.youtube.com/watch?v=i-boKlTJ-7U

25. Some Consulting companies for CSR