Role of Independent Directors
Companies Act - an overviewPutting in perspectiveIndependent directorsSetting perspective and priority – formulating policy and
frameworkSetting M& E system
Companies Act - an overviewPutting in perspectiveIndependent directorsSetting perspective and priority – formulating policy and
frameworkSetting M& E system
Applicability
•It will also apply to foreign companies registered in India
•Net profit will not include dividend income received from another Indian company following the provisions of the companies law or from profits of its own overseas branches
CSR Committee consisting of three or more directors, out of which at least one director shall be an independent
director
Unlisted public company or private company can have a committee without such an
independent director
A private company having only two directors on its boards shall constitute its committee with two such directors
For foreign company, committee should have at least two personsOne: Resident in India authorized to accept on behalf of the company service of process and any notices or other documents required to be served on the companyOther: nominated by the foreign company
CSR governance : CSR Committee
Role of CSR Committee and the board
Formulate and recommend a CSR policy
Recommend activities and amount of expenditure to be incurred
Monitor the policy from time to time
Constitute a CSR committeeApprove a CSR policy (indicating
the list of activities along with the expenditure) & publish the same in its report and on the website
Spend at least 2% of average net profit during the three immediately preceding financial years. If not, specify the reasons for not spending the amount
Ensure that the activities as are included in CSR policy of the company are undertaken by the company
CSR CommitteeCSR Committee
BoardBoard
CSR policy
Targeting
Schedule VII
Schedule VII
Schedule VII
Budget allocation
Implementation
Disclosure
•Display CSR activities on the website•Annual report on CSR
Disclosure
Reporting on CSR spendCSR project/activity identified
Sector in which the project is covered
Projects/ program
1) Local area or other2) State and district of the project/program
Project/ Program wise budget (Amount outlay)
Amount spent on the projects/programs
Sub heads1)Direct expense2) Overheads
Cumulative expenditure up to the reporting period
Amount spent direct or through implementation agencies
Companies Act - an overviewPutting in perspectiveIndependent directorsSetting perspective and priority – formulating policy and
frameworkSetting M& E system
Source: UNESCAP (United Nations Economic and Social Commission for Asia and the Pacific ) Publication
Business responsibility perspective
NVG perspective
Business Responsibility
Business Responsibility
Approaches for CSR Governance
Companies Act - an overviewPutting in perspectiveIndependent directorsSetting perspective and priority – formulating policy and
frameworkSetting M& E system
Constitution of Board
Competencies of Independent Directors
No independent director shall hold office for more than two consecutive terms, but such independent director shall be eligible for appointment after the expiration of three years of ceasing to become an independent director
An independent director - neither himself nor any of his relatives is a Chief Executive or director, by whatever name called, of any nonprofit organisation that receives twenty-five per cent or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent or more of the total voting power of the company; or who possesses such other qualifications as may be prescribed
Role of CSR Committee and the board
Formulate and recommend a CSR policy
Recommend activities and amount of expenditure to be incurred
Monitor the policy from time to time
Constitute a CSR committeeApprove a CSR policy (indicating
the list of activities along with the expenditure) & publish the same in its report and on the website
Spend at least 2% of average net profit during the three immediately preceding financial years. If not, specify the reasons for not spending the amount
Ensure that the activities as are included in CSR policy of the company are undertaken by the company
CSR CommitteeCSR Committee
BoardBoard
Duties of the independent director
Evaluation of independent directors
Companies Act - an overviewPutting in perspectiveIndependent directorsSetting perspective and priority – formulating policy and
frameworkSetting M& E system
Basic policy elements as per the companies act
Companies Act - an overviewPutting in perspectiveIndependent directorsSetting perspective and priority – formulating policy and
frameworkSetting M& E system
Performance management cycle
Source: Central government: Cost-effectiveness and improving annual reports,, Controller and Auditor General, New Zealand
Measuring performance and impact
Elements of M&E
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