The Companies Bill, 2012 has brought certain requirements related to
Corporate Social Responsibility which have to be met by all companies which meet
the specified criteria.
Relevant Provision: Clause 135
Applicability: Every company which
meets any of the following criteria:
(1)
Net worth of Rs. 500 crore or
more
(2)
Turnover of Rs. 1000 crore or
more
(3)
Net profit of Rs. 5 crore or
more
during any financial year shall.
Corporate Social Responsibility Committee of the Board:
(1) Composition:
a. Minimum
3 Directors
b. At
least 1 Independent Director
(2) Disclosure:
The Board's Report under section 134(3) shall
disclose the composition of the Corporate Social Responsibility Committee.
(3) Duties:
a. Formulate
and recommend to the Board, a CSR Policy which shall indicate the activities to
be undertaken by the company as specified in Schedule VII;
b. Recommend
the amount of expenditure to be incurred on these activities;
c. Periodic
monitoring of the CSR Policy of the company
Duties of the Board of Directors:
The Board of Directors
shall:
a.
After taking into account the
recommendations made by the CSR Committee, approve the CSR Policy for the
company;
b.
Disclose contents of such Policy
in its report and also place it on the company's website in such manner as may
be prescribed;
c.
Ensure that the activities as
are included in Corporate Social Responsibility Policy of the company are
undertaken by the company.
d.
Ensure that the company spends,
in every financial year, at least 2 percent of the average Net Profits of the
company made during the 3 immediately preceding financial years, in pursuance
of its CSR Policy:
i.
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.
ii.
Provided further that if the
company fails to spend such amount, the Board shall, in its report under section
134(3)(o), specify the reasons for not spending the amount.
Activities as mentioned in Schedule VII:
The following activities
may be included by companies in their CSR Policy:
(i)
Eradicating extreme hunger and
poverty;
(ii)
Promotion of education;
(iii)
Promoting gender equality and
empowering women;
(iv)
Reducing child mortality and
improving maternal health;
(v)
Combating HIV, AIDS, malaria and
other diseases;
(vi)
Ensuring environmental
sustainability;
(vii)
Employment enhancing vocational
skills;
(viii)
Social business projects;
(ix)
Contribution to the Prime
Minister's National Relief Fund or any other fund set up by the Central
Government or the State Governments for socio-economic development and relief
and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other
backward classes, minorities and women;
(x)
Such other matters as may be
prescribed.
