Corporate Social Responsibility- Applicability, CSR committee & Activities

1. APPLICABILITY: Every company having 

Net worth of Rs 500 cr. Or more or 

Turnover of Rs 1000 cr. or more or 

Net profit of Rs 5 cr. or more, 

during immediately preceding financial year shall constitute a separate CSR (CORPORATE SOCIAL RESPONSIBILITY) committee. However, where the amount to be spent for CSR activities does not exceed Rs 50 lakhs, there is no requirement for constitution of CSR committee, function of such committee can be done by the board of the company. 

2. COMPOSITION OF CSR COMMITTEE: CSR committee comprises of three or more directors out of which one shall be the independent director. (Provided where the appointment of independent director is not applicable to any company, it can form CSR committee with other directors) 

3. FUNCTION OF CSR COMMITTEE: CSR committee shall formulate CSR policy and recommend activities to be undertaken by the company, amount to be spent in such policy and also monitor the CSR policy of the company. 

4. CSR EXPENDITURE: Company to spend at least 2% of its average net profit of the company during the three immediately preceding years. 

5. DISCLOSURE OF CSR POLICY: Company shall disclose composition of CSR committee and contents of its CSR policy in the board report and on the website of the company and in case the company fails to spend amount on CSR activites, then also disclose the reason of such failure in the board’s report. 

6. CSR ACTIVITIES: CSR policy should be inconsistent with activities given under schedule VII of The Companies Act 2013: 

A. Towards eradicating poverty, hunger and malnutrition, sanitation, and making available clean drinking water. 

B. Promoting education, vacation skills, special education for children, women and elderly. 

C. Promote gender equality, women empowerment, setting up old age homes, hostels, orphans, day care centres and other facilities for senior citizens and economically backward people. 

D. Ensure sustainable environment, protection of flora and fauna, animal, soil, air water and all other natural resources. 

E. Protect national heritage, art and culture, setting up libraries, protection and development of traditional art and handicrafts. 

F. Measures towards Development of widows of armed forces people. 

G. Promote rural sports, Olympics and Paralympic sports 

H. Contribution towards prime minister national relief fund or any other fund set up by the central government. 

I. Contribution towards research and development projects in the field of science technology or medicines. 

J. Contribution to public funded universities, IITs, DRDO, AYUSH and ICMR etc. 

K. Rural development projects. 

L. Towards disaster management activities. 

7. AMOUNT SHALL NOT BE SPENT FOR THE FOLLOWING ACTIVITIES: 

A. Activities undertaken by the company in the normal course of the business. 

B. Activities undertaken by the company outside India except for training of Indian sports personnel. 

C. Contribution to any political party directly or indirectly. 

D. Activities benefitting employees of the company. 

E. Activities carried out for fulfilment of any other statutory obligations under any other law. 

F. Activities supported by the companies on sponsorship basis for deriving marketing benefits for its own products and services.