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Corporate Social requirements in India

The Government of India has notified the rules for CSR spending u/s 135 of the New Companies Act 2013 along with Companies (Corporate Social Responsibility Policy) Rules, 2014 effective from 1st April 2014.
Eligibility Criteria:
Company (includes foreign company with branches or project in India) having:
  • Minimum net worth of rupees 500 Crore.
  • Turnover up to "1000 Crore"
  • having a net profit of at least '5crore'.
during any financial year, are covered by this provision
.
Composition of CSR Committee under section 135 of the Companies Act, 2013
The Company should constitute a Corporate Social Responsibility Committee as follows:
  1. The Committee shall consist of minimum 3 (three) including 1 (one) Independent Director, however in case of Private Company or the Company, which is not required to appoint Independent Director on board, or Foreign Company the committee can be formulated with (2) two directors.
  1. The CSR Policy shall be formulated in accordance with Schedule VII and the CSR Committee will be responsible for framing the policy, finalizing the amount to be spent on CSR, monitoring & implementation of the Scheme.
  1. If Company ceases to fulfill the eligibility criteria for three consecutive years, then the company is not required to comply until the company will meet the eligibility criteria once again.
The CSR Rules provides the manner in which CSR committee shall formulate, monitor the policy and manner of understanding for CSR activities.
Under the rules, the Government has also fixed a threshold limit of 2% of the "Average' Net Profits of the block of previous three years on CSR activities and if Company fails to spend such amount, disclosures are to be made for the same. But an exemption has been given to the Companies that do not satisfy the above threshold for three consecutive years.
Yearly Compliances:-
  1. The Annual Report of the Company shall include a comprehensive Report on CSR in the format as prescribed in theCompanies (Corporate Social Responsibility Policy) Rules, 2014, containing particulars on Overview of CSR Policy, Composition of the Committee, Avg. Net Profit, prescribed expenditure and details of its spending, reason in case of failure etc.
  1. The disclosure on CSR in Board Report should also be available on the Company's Website.
  1. The activities included in the CSR Policy and the prescribed expenditure being undertaken/ spent shall be ensured by the Board, in the respective manner.

An ISO 26000 is the accepted worldwide standard for Corporate Social Responsibility (CSR).

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