Applicability of the CSR:

1. Every Company having – Net worth of Rs. 500 crore or more,

2. Turnover of Rs. 100 crore or more, or –
3. Net profit of Rs. 5 crore or more during the immediately preceding financial year

shall constitute Corporate Social Responsibility Committee Meeting. 2. Every Company

including its holding or subsidiary, and a foreign company defined under clause (42) of
section 2 of the Act having its branch office or project office in India which fulfills the criteria
shall also comply with the provisions of Section 135 of the Act. 3. However, if any company
ceases to meet the criteria for 3 consecutive financial years then it is not required to comply
with CSR provisions till such time it meets specific criteria. ♦ Constitution of Committee: As
per CAA, 2020, every company to which CSR criteria is applicable and having CSR spent
more than Rs. 50 lakh p.a. shall required to constitute a CSR committee of the Board.
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. A private
company having only two directors on its Board shall constitute its CSR Committee with two
such directors. A company is not required to appoint an independent director pursuant to
sub-section (4) of section 149 of the Act, shall have its CSR Committee without such
director. In case of a foreign Company, the Corporate Social Responsibility Committee shall
comprise of two persons of which one person shall be the person resident in India
authorised to accept notices and any document on behalf of the Company and the other
person shall be nominated by foreign company. It is the duty of the Corporate Social
Responsibility Committee to monitor Corporate Social Responsibility Policy of the Company
from time to time. ♦ Duties of CSR Committee: 1. As per amendment dated 22/01/2021,
CSR committee shall formulate and recommend to the Board an Annual Action Plan in
pursuance of its CSR Policy, which shall include the following namely; Annual Action Plan: √
List of CSR Projects or Programmes √ Areas where CSR projects to be implemented √
Manner of execution √ Modalities of utilization of funds and implementation schedule for the
projects √ Monitoring and reporting mechanism for the projects √ Details of need and impact
Assessment. Provided that Board may after such Annual Action Plan at any time during the
Financial Year, as per the recommendation of its CSR committee, based on the reasonable
justification to that effect. ♦ New role of the Board: √ Approve CSR Policy of the company
and ensure that CSR activities undertaken by the company as per policy √ Ensure that the
company spends minimum 2% of the net average net profit made during the 3 immediately
preceding year. √ Ensure that the Board report cover disclosure √ Ensure that CSR activities
are undertaken either by the company itself or through other entity and form CSR-1 is filled
with ROC. √ Monitor implementation of CSR projects or modify such projects, if required √
Ensure that the funds have been utilized for the purpose and manner approved by the board
♦ CSR Implementation: The Board shall ensure that the CSR activities are undertaken by
the company itself or through – a company established under section 8 of the Act, or a
registered public trust or a registered society, registered under section 12A and 80G of the
Income Tax Act, 1961 (43 of 1961), established by the company, either singly or along with
any other company, or a company established under section 8 of the Act or a registered trust
or a registered society, established by the Central Government or State Government; or any
entity established under an Act of Parliament or a State legislature; or a company
established under section 8 of the Act, or a registered public trust or a registered society,
registered under section 12A and 80G of the Income Tax Act, 1961, and having an
established track record of at least three years in undertaking similar activities. A company
may engage international organisations for designing, monitoring and evaluation of the CSR
projects or programmes as per its CSR policy as well as for capacity building of their own
personnel for CSR. A company may also collaborate with other companies for undertaking
projects or programmes or CSR activities in such a manner that the CSR committees of
respective companies are in a position to report separately on such projects or programmes
in accordance with these rules. The Board of a company shall satisfy itself that the funds so
disbursed have been utilised for the purposes and in the manner as approved by it and the
Chief Financial Officer or the person responsible for financial management shall certify to the
effect. In case of ongoing project, the Board of a Company shall monitor the implementation
of the project with reference to the approved timelines and year-wise allocation and shall be
competent to make modifications, if any, for smooth implementation of the project within the
overall permissible time period. ♦ Details to be given in Form CSR-1: Nature of Entity Entity
is established by any company or group company CIN of Company PAN of Entity; details of
Directors, Board of trustees, chairman, CEO, Secretary and authorized representative of
entity Email on which OTP be generated Copy of certificate of registration and PAN should
be attached. ♦ Amount to be spent for CSR: 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. The board shall ensure that the administrative
overheads shall not exceed five percent of total CSR expenditure of the company for the
financial year. Any surplus arising out of the CSR activities shall not form part of the
business profit of a company and shall be ploughed back into the same project or shall be
transferred to the Unspent CSR Account and spent in pursuance of CSR policy and annual
action plan of the company or transfer such surplus amount to a Fund specified in Schedule
VII, within a period of six months of the expiry of the financial year. Where a company
spends an amount in excess of requirement, such excess amount may be set off against the
requirement to spend up to immediate succeeding three financial years. ♦ CSR Policy: CSR
Policy means a statement containing 1. The approach and direction given by the Board of a
company, taking into account the recommendations the CSR committee. 2. And includes
guiding principles for selection, implementation and monitoring of activities. 3. As well as
formulation of the Annual Action Plan. Every Corporate Social Responsibility Committee
shall formulate and recommend the Corporate Social Responsibility Policy to the Board for
their approval. The Corporate Social Responsibility policy must contain the activities as
specified in Schedule VII of the Companies Act, 2013 on which the amount is spend as
Corporate Social Responsibility. ♦ Disclosure in Board Report: The Board will approve the
Corporate Social Responsibility Policy of the company and disclose the Policy on the
website, if any and disclose the contents of the Policy in the Board Report of the Directors. If
the Company fails to spend the amount on the activities of Corporate Social Responsibility,
the Company shall disclose the reasons of not spending in the Board Report of that
Financial Year. ♦ ANNEXURE-II to Board Report: √ Brief outline of CSR Policy √
Composition of CSR Committee √ Web-Link where composition of CSR Committee, Policy
and projects approved are disclosed √ Details of Impact Assessment of CSR project, if
applicable attach report and give amount spent on Impact Assessment. √ Details of amount
available for set off √ CSR amount spent/unspent for the financial year. √ Details of CSR
amount spent against Ongoing Projects and other than ongoing projects for the financial
year. √ Details relating to creation or acquisition of capital asset through CSR spent in the
financial year. √ Reason, if company fails to spend CSR obligation. ♦ Display of CSR
activities on its website: The Board of Directors of the Company shall mandatorily disclose
the composition of the CSR Committee, and CSR Policy and Projects approved by the
Board on their website, if any, for public access. ♦ Transfer of unspent CSR amount Until a
fund is specified in Schedule VII for the purposes of subsection (5) and(6) of section 135 of
the Act, the unspent CSR amount, if any, shall be transferred by the company to any fund
included in schedule VII of the Act. ♦ Procedure for formation of Corporate Social
Responsibility BEFORE CONSTITUTION OF CSR COMMITTEE 1. Check the following in
the Balance Sheet of the immediately preceding F.Y. Net Worth – Rs. 500 Crore or more
Turnover – Rs. 1000 Crore or more Net Profit – Rs. 5 Crore or more 2. If, the Company falls
under the criteria prescribed above, then follow the below mentioned procedure. 3. Issue of
Notice for the Board Meeting for the Constitution of Corporate Social Responsibility
Committee by such number of Directors (as may be applicable), as the Members of the
Committee. 4. Convene Board Meeting for the Constitution of Corporate Social
Responsibility Committee. AFTER FORMULATION OF CSR COMMITTEE 5. Issue of Notice
for Convening Corporate Social Responsibility Committee Meeting for formulation and
recommendation of Corporate Social Responsibility Policy to the Board. 6. Convene
Corporate Social Responsibility Committee Meeting for formulation and recommendation of
Corporate Social Responsibility Policy to the Board. 7. Issue of Notice for the Board Meeting
for approval of Corporate Social Responsibility Policy. 8. Convene Board Meeting for the
approval of Corporate Social Responsibility Policy. 9. Finalisation of Corporate Social
Responsibility Policy. 10. Issue of Notice for Convening Corporate Social Responsibility
Committee Meeting for recommendation to the Board for allocation of funds to be spend on
the activities of Corporate Social Responsibility. 11. Convene Corporate Social
Responsibility Committee Meeting for recommendation to the Board for allocation of funds to
be spend on the activities of Corporate Social Responsibility. 12. Issue of Notice for the
Board Meeting for allocation of funds to be spend on the activities of Corporate Social
Responsibility. 13. Convene Board Meeting for the approval for allocation of funds to be
spend on the activities of Corporate Social Responsibility. 14. the Company shall disclose
the contents of the policy in the Board Report and if the amount is not spend on CSR, then
the Company shall disclose the reasons for not spending the amount. ♦ Penalty for Non-
compliance If a company is in default in complying with the provisions of sub-section (5) or
sub-section (6), the company shall be liable to a penalty of twice the amount required to be
transferred by the company to the Fund specified in Schedule VII or the Unspent Corporate
Social Responsibility Account, as the case may be, or one crore rupees, whichever is less,
and every officer of the company who is in default shall be liable to a penalty of one-tenth of
the amount required to be transferred by the company to such Fund specified in Schedule
VII, or the Unspent Corporate Social Responsibility Account, as the case may be, or two lakh
rupees, whichever is less. The Central Government may give such general or special
directions to a company or class of companies as it considers necessary to ensure
compliance of provisions of this section and such company or class of companies shall
comply with such directions. Where the amount to be spent by a company under sub-section
(5) does not exceed fifty lakh rupees, the requirement under sub-section (1) for constitution
of the Corporate Social Responsibility Committee shall not be applicable and the functions of
such Committee provided under this section shall, in such cases, be discharged by the
Board of Directors of such company. ♦ Schedule VII Activities which may be included by
companies in their Corporate Social Responsibility Policies Activities relating to:- (i)
Eradicating hunger, poverty and malnutrition, promoting health care including preventive
health care and sanitation including contribution to the Swach Bharat Kosh set-up by the
Central Government for the promotion of sanitation and making available safe drinking
water. (ii) Promoting education, including special education and employment enhancing
vocation skills especially among children, women, elderly and the differently abled and
livelihood enhancement projects. (iii) 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. (iv) 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-up by the Central Government for rejuvenation of
river Ganga. (v) Protection of national heritage, art and culture including restoration of
buildings and sites of historical importance and works of art; setting up public libraries;
promotion and development of traditional art and handicrafts; (vi) Measures for the benefit of
armed forces veterans, war widows and their dependents, Central Armed Police Forces
(CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents including
widow; (vii) Training to promote rural sports, nationally recognized sports, paralympic sports
and olympic sports (viii) Contribution to the prime minister’s national relief fund 8[or Prime
Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)]
or any other fund set up by the central govt. for socio economic development and relief and
welfare of the schedule caste, tribes, other backward classes, minorities and women; (ix) (a)
Contribution to incubators or research and development projects in the field of science,
technology, engineering and medicine, funded by the Central Government or State
Government or Public Sector Undertaking or any agency of the Central Government or State
Government; and (b) Contributions to public funded Universities; Indian Institute of
Technology (IITs); National Laboratories and autonomous bodies established under
Department of Atomic Energy (DAE); Department of Biotechnology (DBT); Department of
Science and Technology (DST); Department of Pharmaceuticals; Ministry of Ayurveda, Yoga
and Naturopathy, Unani, Siddha and Homoeopathy (AYUSH); Ministry of Electronics and
Information Technology and other bodies, namely Defense Research and Development
Organization (DRDO); Indian Council of Agricultural Research (ICAR); Indian Council of
Medical Research (ICMR) and Council of Scientific and Industrial Research (CSIR),
engaged in conducting research in science, technology, engineering and medicine aimed at
promoting Sustainable Development Goals (SDGs) (x) Rural development projects (xi) Slum
area development. Explanation.- For the purposes of this item, the term `slum area’ shall
mean any area declared as such by the Central Government or any State Government or
any other competent authority under any law for the time being in force. (xii) Disaster
management, including relief, rehabilitation and reconstruction activities. Tags: Companies
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