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C o r p o r a t e S o c i a l R e s p o n s i b i l i t i e s
Section 135 Companies Act ,2013
Shifali Singh
MEANINGCSR is a management concept whereby companies integrate Social and Environmental concerns in their business operations and interactions with their stakeholders.
Generally, it is understood as the way in which a company achieves a balance of ECONOMIC, ENVIROMENTAL and SOCIAL imperatives, while at the same time addressing the expectations of the shareholders and stakeholders.
MANDATORY CSR OBLIGATION
Universally applicable to all
companies
Section 166(2) (duties of directors)
Applicable to specified
companies
Section 135 (mandatory minimum spends on
specified CSR activities every financial year
DUTIES OF DIRECTOR
Section 166(2) requires a director of company :
To act in good faith For the benefit of its members as
whole In the best interests of
The companyIts employeesIts ShareholdersThe CommunityFor the protection of environment.
Criteria for applicability of CSR u/s 135(1)
Either of the following 3 criteria
Turnover during FY Rs. 1000 crores and more
Net Profit during FY Rs. 5 crore or more
Net worth Rs.500 crore
or more
Mandatory CSR obligation under section
135
Constitute CSR
Committee of Directors
Formulate CSR Policy
Undertake CSR
activities as CSR Policy
Mandatory CSR spends of
min. 2% of average net
profit in every FY
COMPOSITION OF CSR COMMITTEE
CSR Committee of the board consisting of:-
Three or more directors
Out of which at least one director should be INDEPENDENT DIRECTOR.
Exception:-
i. An unlisted Company or a Private Company
Not require to appoint Independent Directors
ii. A Private Company
Can constitute CSR Committee with 2 director
iii. Foreign Company
Committee shall comprise at least 2 person of which one shall be as specified in section 380(1)(d) and another person shall be nominated by the foreign Company
FUNCTION 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 activity.
Monitor the CSR Policy of the company from time to time.
RESPONSIBILTY OF BOARD OF COMPANY
After taking into account the recommendations made by the CSR Committee, approve the CSR Policy for the company.
Disclose contents of such Policy in its report.
Place the Policy on the Company’s Website
Ensure that Company are undertaking the activities of policy
EXPENDITURE Company should spend in every financial year at least 2% of
the Average Net Profit of the company made during the three immediately proceedings Financial year
Preceding Three financial year is in pursuance of its CSR Policy.
Preference to the local area and area around it where it operates, for sending the amount earmarked for CSR activities
CSR POLICY SCHEDULE VII
Eradicating hunger, poverty and malnutrition.
Promoting preventive healthcare and sanitation
Making available safe drinking water Promoting education Livelihood enhancement project Empowering women Setting up homes and hostels for women
and orphans Setting up old age home
Ecological Balance Ensuring Environmental SustainabilityAnimal welfare Protection of Flora and FaunaProtection of National heritage, art
and Culture Contribute to specified Government Funds Rural Development Project And many more.
PENALTIES AND PUNISHMENTS
Contravention of section 135:-
Company who is in default or such other person shall be punishment with:
Fine extended to Rs.10,000
----And----
Contravention continues, further fine extended to Rs. 1000 for every day.